Government, through Operation Vulindlela, has made progress on several key reforms outlined in the October 2020 Economic Recovery Plan.
National treasury emphasized this in a briefing to parliament on the 2021 Medium Term Budget Policy Statement tabled last week.
Members of the standing and select committees on finance and appropriation were told that government will continue to narrow the budget deficit to stabilise the debt-to-GDP ratio.
This will be achieved mainly by controlling non-interest expenditure growth.
Treasury added that the consolidation will be supported by structural reforms that unlock private-sector investment and job creation.
The revenue windfall in 2021 will partially support increased allocations for urgent social and economic priorities, increasing non-interest spending.
The plan is to maintain such allocations should revenue performance improve over the medium term.
Treasury also declared that the fiscal outlook is highly uncertain.
“Major risks include the durability of the economic recovery, the legal process associated with public-service compensation, and future wage negotiations.”
Treasury highlighted that several state-owned companies and municipalities have insufficient funds to cover operational expenses.
According to treasury, the COVID-19 pandemic has intensified South Africa’s social and economic crises putting further strain on public finances.
“Over the next three years, government will balance support for economic recovery and reconstruction – through both short-term spending measures and structural reforms –along with rebuilding the public finances.”
Treasury stressed that government will not commit to new long-term spending in response to temporary revenue windfalls.
“No additional funding is provided to state-owned companies over the medium-term.”