Fiscal Policy SA- Budget Speech

Table of Contentsi. Executive Summary31. Introduction62. Essence of Budget 200772.1 Total Spending (Medium terminal Expenditure Framework Period)83. Economic Backdrop ? Buoyant domestic help Growth95. Rationale of 2007 Budget Speech116. Macro parsimoniousness137. Fiscal Policy147.1 Expansionary Fiscal Policy147.2 Tax168. Fiscal and pecuniary challenges208.1 Monetary Challenges229. Shortcomings of 2007 Budget.2310. Suggestions on how to address the shortcomings2410.1 Fiscal measures2410.2 Monetary measures2411. angle of inclination of References:2612.ANNEXURES28i. Executive SummaryWhile delivering the 2007 Budget Speech on 21 February 2007, the elate and charismatic Trevor Manuel?s tone typified South Africa?s economy that has been performing remarkably well over the past 4 years largely due to sound fiscal and monetary policies and global influences. The increased quantity and quality of spending in the Budget is fuelled by the rationale of summarily accelerating the investment tramp and pace of yield; improving the lives of marginalised South Africans; primary(prenominal)taining a forward-looking security net; combating crime and improving the capacity and forcefulness of state; show case the country through preparing for the 2010 soccer event; and encouraging the culture of saving.

The Budget and its continued expansionary fiscal stance is however characterised by significant challenges that may resist on progress in achieving certain objectives.



These include vis-à-vis polity lags, lack of capacity with regard to spending, government red-tape and inefficiencies, adverse rent-seeking behaviour, income and riches redistribution. Global influences that will pose challenges include the anticipated overthrow global growth due to suppressed US growth, risks e.g. cover prices; US current account deficit amidst large surpluses amongst oil-producing countries. The main monetary challenge is that the South African Reserve margin seeks to suppress demand to match supply but this is the low gear growth option. The proposed long term solution and high growth option is to boost supply in run to control demand with official and private sector initiatives.

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