Transcript INTRODUCTION – About BUSA

BUSINESS UNITY SOUTH AFRICA
SUBMISSION ON
FINANCE & FISCAL REVENUE
PROPOSALS FOR 2012/13
Presented by
Prof. Raymond Parsons
BUSA Special Policy Advisor
30 October 2012
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INTRODUCTION – About BUSA
 BUSA comprises business organisations, chambers;
industry, professional & corporate associations
 We represents SA business, incl. SMMEs, on macroeconomic and high level issues nationally and
internationally
 Our function is to ensure business plays a
constructive role in SA’s economic growth,
development and transformation
 BUSA is Business’ representative at Nedlac
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ECONOMIC OUTLOOK
 BUSA shares the realistic assessment of the
economic outlook given in the MTBPS in
respect of both external and internal factors
 Common element in assessing growth
prospects is uncertainty
 There is close convergence between National
Treasury and BUSA’s economic forecasts
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GLOBAL OUTLOOK
Lower Growth and Higher Risks
ECONOMIC GROWTH FORECASTS FOR 2012/13
DEVELOPED COUNTRIES
1.5%
DEVELOPING COUNTRIES
5.5%
EUROZONE
0.1%
CHINA
7.5%
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DOMESTIC OUTLOOK
Weak Performance
FORECASTS
DOMESTIC GROWTH
2.5% (2012) – 3% (2013)
3%-6%
CONSUMER PRICE INFLATION
pressure from food prices; administered
prices and fuel costs
Increase of 5.5% (2012)
GROSS FIXED CAPITAL
FORMATION
Supported by public sector capital
spending; business and investor
confidence is weak
DECLINING EXPORTS &
RISING IMPORTS
 Widening current account
deficit
 Weakening rand
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AN OVERALL APPROACH
 SA has remained within modest 3%-3.5% growth; not 5%-7%
growth of other emerging markets
 BUSA believes it necessary to distinguish between :
 Factors over which SA has little or no control, e.g. Global economy
 Factors over which SA does have control, e.g. Domestic policies
 BUSA agrees with the Finance Minister that we need to tackle
internal challenges to build a stronger economy
 Numerous structural problems are of our own making; Marikana
tragedy, industrial unrest have ripple effects on economy
 Economic consequences feed into MTBPS outlook: growth, tax
revenues, exchange rate, debt ratios and unemployment
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POSITIVE FEATURES OF THE MTBPS
1. Overall approach is once again a balanced and realistic
assessment of challenges face by SA
2. BUSA welcomes extent to which budgetary decisions are
increasingly aligned within the framework of the NDP
3. Provides a definitive statement on the limits that SA’s debt to
GDP ratio of fiscal deficit should not exceed – essential for
investment
4. Emphasis on importance of collaboration among key economic
stakeholders is endorsed by BUSA
5. Renewed message of fiscal discipline is endorsed by BUSA
6. National Treasury’s commitment to the appointment of senior
procurement staff is welcomed and should be expedited
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SOME VULNERABILITIES IN THE MTBPS
1. SA’s headline fiscal ratios may appear safe but this can mask
vulnerabilities
2. BUSA supports a broadly conservative approach to state
spending, but remains concerned by rising public sector wage bill
3. MTBPS indicates taxes may be increased should economy not
recover – other forms of revenue may have to be found
4. Implementing infrastructure projects – improving state capacity
and mobilising private sector capacity essential
5. Excessive rises in administered prices is having a negative effect
– a better planned and coordinate approach is required
6. The 44% drop in FDI flows to SA in the past year is a matter of
deep concern to BUSA
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CONCLUDING COMMENTS
1. If SA can craft and implement the right short and long term
measures to address current challenges, it is possible to prove
sceptics about SA wrong
2. BUSA believes there is a ‘virtuous circle’ of high growth,
democratic governance and social development possible in SA
3. NDP confirms the need for a higher job-rich growth path, a faster
pace of development and a society growth wealthier in the
broadest sense
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CONCLUDING COMMENTS
 In the words of the NDP:
South Africa has the means, the goodwill, the people and the
resources to eliminate poverty and reduce inequality. It is
within our grasp. But it will not happen unless we write a
new story; a story of people, their relationships, their
dreams and their hopes for a better tomorrow. We want our
children and young people to have better life chances than
we have ... The capabilities that the country needs to enable
citizens to thrive include a capable state, leadership from all
sectors of society, a pact for mutual sacrifice and trust.
 This is the message BUSA draws from the latest MTBPS. Government
must create the conditions and environment for higher levels of
investment to create growth
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THANK YOU
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