DA’s Responsible Spending Bill to be presented in Finance Committee

13 February 2024

Tomorrow, on the 14th of February, the DA will present the Responsible Spending Bill to members of the Standing Committee on Finance in Parliament.

A government, like any entity, must operate within its means. When a government consistently spends more than it earns in revenue, a budget deficit forms. To secure the funds necessary to fund this expenditure, the ANC has resorted to deficit financing via increased debt issuance. Over time this unchecked cycle of spending and borrowing has pushed our public finances to a crisis point. Our public debt burden has surged from just 27% of GDP in 2008 to 72.2% (R5.06 trillion) in 2023/24 as per the medium-term budget policy statement’s (MTBPS). The MTBPS revised the debt stabilisation target upwards to 77.7% of GDP by the fiscal year 2026/27 - far extended from the projections in the 2023 Budget.

The cost associated with servicing the increasing debt stockpile has been the fastest growing item on the Budget and continues to an increasing share of GDP and revenue. As a result, debt-service costs have risen from R307.2 billion to R354 billion in the span of a year. This means that we pay nearly R1 billion per day to service debt that had little to no positive impact on the living standards of vulnerable South Africans who are battling a cost of living crisis.

In anticipation of the fiscal crisis that currently besets our economy, the DA presented a proactive solution in the form of our Responsible Spending Bill. The Bill will introduce another fiscal rule to act as a guide for more responsible spending. It will stabilize our fiscal environment and encourage a forward-thinking approach to budget planning.

Currently, South Africa stands out for having implemented an expenditure rule without accompanying it with a debt rule. Treasury’s reliance on an expenditure rule without a debt rule to support it has limited its ability to contain government spending in response to revenue shortfalls. Despite efforts to control spending, this approach has contributed to a rapid deterioration of our debt-to-GDP ratio.

The Responsible Spending Bill will introduce a strategic shift in fiscal policy by integrating a debt rule into the existing expenditure framework. This approach is designed to reinforce fiscal discipline by setting sustainable limits on government debt and expenditure. It will in this manner ensure that spending decisions align better with long-term economic stability and growth objectives.

The ANC's fiscal mismanagement has brought us to the brink of disaster. The DA stands firm in preventing their recklessness from dragging South Africa into ruin. Our Responsible Spending Bill marks the beginning of a disciplined approach to safeguard our financial future.

The DA will set out our Alternative Budget next week, including measures to achieve fiscal stability after government changes next year.

Issued by Dion George, DA Shadow Minister of Finance, 13 February 2024