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No surprises as South African Treasury calling for Budget cuts

by Zodidi Mahlana JOHANNESBURG South Africa (Xinhua) -- With South Africa’s public finances in a precarious state, the National Treasury’s decision to ask all national departments to slash their budgets for the next three years has not come as a surprise, said an expert.

The National Treasury has suggested all national departments cut their budgets by 5 percent in 2020, 6 percent in 2021 and 7 percent in 2022 in the medium-term expenditure framework guidelines.

The guidelines come at a time when the country’s economy growth is stagnant, joblessness on the rise and rating agencies have expressed concerns about billions of rands that have been given to indebted state-owned entities.

The expert believed that while there was a need for budget cuts at national level, this should also be extended to provincial departments.

"It wouldn’t be sufficient at national level only, provincial departments must also deal with their expenditures.

"Treasury has realized that the medium-term budget framework previously announced can no longer materialize because of the poor growth and declining revenue collection," Professor Jannie Rossouw, Head of School of Economic and Business Sciences at the University of the Witwatersrand, told Xinhua on Thursday.

Rossouw suggested that the Treasury continue looking for ways to rein on expenditure and trim the wage bill.

"If government spends without growth and tax, it means government’s debt will increase.

"The major expenditure is the wage bill and not give huge wage increases would assist in reducing expenditure," he said.

He also said that government could place a moratorium on new appointments.

Finance Minister Tito Mboweni would be under immense pressure when he delivers the medium-term budget speech in October as revenue collection is set to decline.

Some have warned the government to cut its expenditure in an effort to avoid approaching financial institutions such as the International Monetary Fund for funds.

The South African government’s debt is now above 60 percent of the GDP.


South African President Cyril Ramaphosa vows to
pursue universal health insurance despite criticism

CAPE TOWN South Africa (Xinhua) -- President Cyril Ramaphosa vowed on Thursday to pursue universal healthcare insurance for all South Africans despite growing criticism.

The National Healthcare Insurance (NHI) bill, submitted to Parliament by Health Minister Zweli Mkhize earlier this month, would offer South Africans the opportunity to fundamentally transform the healthcare system in the country, Ramaphosa said at a Q&A session in Parliament.

"It is for this reason that we are perusing an ambitious program to address the problems in our health system alongside the introduction of the NHI," the president said in response to a question about whether the country is ready to implement the NHI.

This universal healthcare policy was not unique to South Africa and was supported by other countries in the G20, said Ramaphosa.

He said other G20 countries are working towards universal healthcare insurance and South Africa is also on track.

The NHI bill envisages a package of comprehensive health services for free at private and public health facilities as part of the government’s bid to provide more equitable access to quality healthcare.

The landmark bill will benefit all South African citizens, permanent residents, refugees, inmates, designated foreign nationals and all children.

But critics say the financing model of this bill will mean the imposition of a new tax on ordinary South Africans who have already been squeezed dry by the government and cannot be subjected to yet another tax.

Several political parties and numerous bodies, including the South African Private Practitioners’ Forum, voiced scepticism about the bill, calling it unrealistic, too expensive, and would potentially damage the healthcare sector, particularly when the country is facing a financial crisis.

Critics argue that the bill seeks to fundamentally alter healthcare policy in South Africa by creating a state-owned entity to consolidate all funds within the public and private health system, thus resulting in billions of rand being placed in the hands of the politically connected and giving the health minister unvetted powers and in control of the entire health system.

Moreover, the bill completely centralizes the provision of healthcare by placing the management of all central hospitals under the national health department, which would ultimately lead to the nationalization of healthcare, according to critics.

Earlier, Ramaphosa refuted growing criticism against the NHI which he said is the future of the South Africa healthcare sector "whether people like it or not.

Also on Thursday, the South African cabinet said it would implement the NHI "in a phased and responsible manner."

An implementation plan will be developed and published once the bill is passed into law, the cabinet said after a fortnightly meeting in Cape Town.

Parliament’s Portfolio Committee on Health said last week that it was seeking urgent legal advice from the Office of the State Attorney on the constitutionality of the NHI bill.

Before starting deliberating the bill, it will be important to address concerns raised by various people, including those who think they will find space to challenge the constitutionality of the bill, Committee Chairperson Sibongiseni Dhlomo said.

Drastic budget cut for South African police sparks concern amid rising crime

CAPE TOWN South Africa (Xinhua) -- A drastic budget cut for the South African Police Service (SAPS) has sparked concern as the country is facing escalating levels of violence and crime.

It is unconscionable that the National Treasury reduced the budget for the SAPS which "is already severely under-capacitated and under-resourced," the opposition Democratic Alliance (DA) said.

On Wednesday, the SAPS announced in Parliament’s Portfolio Committee on Police that the National Treasury had instructed it to cut its budget by five billion rand (about 328 million U.S. dollars) in 2020/2021, 6.5 billion rand (about 427 million dollars) in 2021/22 and 7.8 billion rand (about 513 million dollars) in 2022/2023.

This will lead to 23,617 posts being lost over the next three financial years.

Currently the SAPS has approximately 191,000 employees, a number which would drop to 167,383 by 2022/23 due to the budget cut.

A drop in personnel is not the way to achieve a 50-percent reduction of violent crime, as promised by President Cyril Ramaphosa earlier this year, the DA said.

"This shocking announcement comes at a time when the majority of South Africans feel increasingly unsafe in their communities, due to escalating levels of violence and crime," DA Shadow Minister of Police Andrew Whitfield said.

Further budget cuts will only continue to hinder SAPS’ ability to provide visible policing and will condemn citizens to living in even greater fear than they do now, he said.

The SAPS is currently 64,000 police officers short of meeting the United Nations (UN) policing ration of 1:220. In South Africa, the police to citizen ratio is 1:380.

A loss of an additional 23,617 personnel is not the answer, Whitfield said.

The DA has proposed an alternative, yet constructive, budget proposal, which considers cutting VIP protection costs instead of other police programs.

The VIP protection budget allocation amounts to approximately 10 million rand (about 657,000 dollars) per individual, per year, with an approximate cabinet cost to taxpayers amounting to 631 million rand (about 41.5 million dollars) yearly.

Moreover, the SAPS’ contingent liability for civil claims currently totals 14 billion rand (about 921 million dollars) per year, with claims relating to unlawful arrests and detention totaling 189 million rand (about 12.4 million dollars) per year.

The budget shortfall should rather be addressed by ensuring a more professional, properly trained police service, with minimal civil claims, the DA said.

Situation calm in South African townships after foreign shops looting

JOHANNESBURG South Africa (Xinhua) -- The situation is calm in South Africa’s Soweto townships following the looting of shops belonging to foreigners and 18 suspects were arrested, South African police said on Friday.

On Wednesday night, several shops belonging to foreigners were looted.

Gauteng police spokesperson Kay Makhubele told Xinhua that the situation is calm and they are monitoring the situation.

"The situation is calm and we are monitoring the affected areas.

"We have arrested 18 suspects who will be charged with public violence.

"They will appear in court soon," said Makhubele.

He condemned the looting of shops on what he blamed on opportunistic criminals.

The chairperson of the African Diaspora Forum (ADF), Vusumuzi Sibanda, said some shops are still closed due to fear.

"The situation is a bit calm with police patrolling but some shops are still closed.

"Some ran away to seek shelter at police stations while some went to live with friends.

"Some shop owners are still afraid to open shops," Sibanda said.

Sibanda said the government is not doing enough to protect foreigners who are always attacked and their property confiscated by locals.

ADF is an organization of citizens of over 35 African countries whose residents stay in South Africa.


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