Nene shrinks government spending in his debut mini-budget


The Medium Term Budget Policy Statement (MTBPS) proposes a series of measures aimed at reducing the budget deficit and stabilise public debt.

“These steps are necessary to ensure the sustainability of South Africa’s most important public spending programmes in a weaker economic environment,” said the Nene.

In his MTBPS, Nene said the government’s proposed measures were intended to boost the economy which is still reeling from the financial crisis of 2008 through the promotion of private-sector investment and leveraging the state’s capacity to plan and manage its programmes.


“The [state seeks to] encourage greater private-sector investment in the economy. Private investment has remained subdued since the opening of the global financial crisis in 2008, and this is reflected in economic performance,” he said. 

“The second challenge is to improve the state’s capacity to plan, manage and maintain its programmes and infrastructure. Recent supply failures in electricity, water and postal services, for example, hurt the economy and wear down public confidence.”

Nene also called for the lowering of the spending ceiling, reduction of government expenditure and increment in government revenue.

The finance minister addressed challenges at the power utility against the background of Eskom’s failure to keep the power on during the past winter with challenges of continuing in this trajectory into the next summer.

“Government therefore proposes a package of fiscal measures to re-establish a sustainable foundation for the public finances, and to build a platform for investment-led growth in the future.”

“The proposals include a lower spending ceiling, reduced government consumption expenditure and increases in revenue.”

Nene added that the most important public spending programmes – those that help poor South Africans – will remain in place and will be protected from inflation.

“These proposals are necessary to sustain social progress and to improve the lives of all South Africans.”

He said government spending has doubled in real terms over the past decade, funding a large expansion of the social wage and capital budgets.

Nene said that weak economic performance has put a great deal of pressure on the fiscal space, with revenue insufficient to cover expenditure.