JOHANNESBURG – President Cyril Ramaphosa on Thursday unveiled a list of measures that would include the prioritisation of generational capacity outside of Eskom, modernising the country’s rail network and prioritise infrastructural development to kickstart the economy.
Ramaphosa told the parliament during the State of the Nation Address (Sona) yesterday that the government would introduce a wide range of structural reforms aimed at reducing the public sector wage bill, government spending and the resizing of state-owned enterprises.
He said that the National Treasury and the SA Reserve Bank were working on measures to reduce government spending.
Ramaphosa said the government could not afford to spend more money than the fiscus could afford.
He said the government had engaged social partners, including labour, to contain the public wage bill and to reduce wastage.
“Efforts to reduce government spending, prioritise resources more effectively, and improve the efficiency of our tax system are important – but insufficient – contributions towards stabilising our public finances,” Ramaphosa said.
“Achieving sustainability will ultimately require us to address structural challenges in the economy that raise the cost of living and doing business.”
Last year Finance Minister Tito Mboweni said that the Treasury had identified spending reductions of R21billion in 2020/21 and R29bn in 2021/22.
Mboweni said the government needed to find additional measures in excess of R150bn over the next three years to achieve its targets.
Ramaphosa yesterday said that existing low levels of growth and revenue shortfalls had forced the government to review its public finances.
“Low levels of growth mean that we are not generating enough revenue to meet our expenses, our debt is heading towards unsustainable levels, and spending is misdirected towards consumption and debt-servicing rather than infrastructure and productive activity,” he said.
“We cannot continue along this path. Nor can we afford to stand still.”
Ramaphosa said Mboweni would outline the exact measures when he delivered his Budget Speech in two weeks.
Ramaphosa reiterated his support for Mboweni’s growth plan published in August last year.
He said that the government would issue a Section 34 Ministerial Determination to develop additional grid capacity from renewable energy, natural gas, hydro power, battery storage and coal.
“We will initiate the procurement of emergency power from projects that can deliver electricity into the grid within 3 to 12 months from approval,” Ramaphosa said.
“The National Energy Regulator will continue to register small scale distributed generation for own use of under 1MW, for which no licence is required.”
He said the government would also open a bid window 5 of renewable energy from independent power producers and negotiate supplementary power purchase agreements to acquire additional capacity from existing wind and solar plants.
“We will also put in place measures to enable municipalities in good financial standing to procure their own power from independent power producers.”