Development budget cuts

The revelation that the federal government plans to cut its allocation towards the Public Sector Development Programme (PSDP) by 30 per cent should not necessarily be seen in bad light. The primary reason given for the cut is that the federal government no longer needs to budget for provincial allocations, since provincial governments will now be given a larger share of the overall revenues of the government. In essence, the federal government is simply making good on its promise to transfer more fiscal control towards the provinces, thus reducing its own outlays.

This re-allocation of resources is expected to have the dual effect of increasing provincial financial autonomy while reducing the federal government’s budget deficit. One anticipates this measure as being good for the political economy of the nation. It is up to the provinces to maintain the right balance between fiscal discipline and spending as necessary, in order to encourage development and growth. This is a task for which the provincial governments are not yet prepared, and teething problems are to be expected. Nevertheless, this measure, while likely to be somewhat chaotic at the outset, was necessary in order to move the nation towards a more representative and functional democracy.

We recommend focusing on programmes that are likely to deliver long-term economic gains rather than boosting the short-term political popularity of elected officials, admittedly a temptation difficult to resist for most politicians. They should, however, realise that they have been sent to their respective political capitals to do what is best for the country and not their own political careers. This necessarily means greater transparency in the allocation of PSDP funds to various projects, especially keeping in mind relevance and need.