What you need to know about Mboweni’s mid-term budget speech
All eyes were were on the Minister of Finance, Tito Mboweni as he delivered the Mid-Term Budget Speech on Wednesday 28 October 2020.
The budget statement is expected to proffer solutions to the difficult economic backdrop, which became worse as a result of the covid-19 pandemic.
He outlined so many points that will revive the economy but here are the main highlights of what the government plans to spend on according to Mboweni’s mid-term budget speech.
- Mboweni indicated that the economy is expected to contract by 7.8% this year, while 2021 outlook seems uncertain.
MBOWENI ON DEBT-TO-GDP RATIO
- Government’s revised fiscal framework prompts the ratio of debt-to-GDP to be stabilised at around 95% within the next five years.
- Stock of gross debt expected to rise from roughly R4 trillion to R5.5 trillion in 2023/2024.
“The medium-term fiscal strategy narrows the main budget primary deficit from an expected R266 billion in 2021/2022 to R84 billion in 2023/2024 and we achieve a surplus by 2025/2026,” he said.
- “We propose consolidated spending of R6.2 trillion over the 2021 Medium Term Expenditure Framework, of which R1.2 trillion goes to learning and culture, R978 billion to social development and R724 billion to health”.
- South African economy is forecasted to grow by 3.3% in 2021, 1.7% in 2022 and 1.5% in 2023.
PROCUREMENT OF ELECTRICITY
- A means has been secured for the procurement of almost 12 000 MW of new electricity capacity which will be provided by independent power producers (IPPs).
- R2.2 billion has been subsidised to support the Social Housing Programme aimed at poor, working South Africans. Another 6.7 billion has also been contractually committed to this programme and total investment for the programme will be R20 billion over the next 10 years; and
- Student Housing Programme worth an estimated R96 billion is ongoing.
MBOWENI ANNOUNCES R350 GRANT EXTENSION
- Over 22 million people which is nearly half of the population received cash grants payments during the lockdown.
- Social relief of distress grant has been extended to the end of January 2021 by the Cabinet and will direct R6.8 billion from the public employment programme allocation.
- However temporary increases in other grants will, unfortunately, come to an end.
- R1 billion was also allocated for food relief to fight hunger.
- R12.6 billion allocated to the employment initiatives championed by President Cyril Ramaphosa.
SCHOOLS, ECD, SOCIAL WORKERS
- R7 billion added to Provincial Equitable Share to support jobs at fee-paying public schools and government-subsidized independent schools.
- R600 million allocated to employ early childhood development and social workers.
MBOWENI’S ALLOCATIONS TO NATIONAL, PROVINCIAL AND LOCAL DEPARTMENTS
- In the Revised Division of Revenue for 2020/2021, R806.7 billion is proposed to be allocated to national departments, R628.3 billion to provinces and R139.9 billion to local government.
- Government is borrowing at a rate of R2.1 billion per day.
STATE-OWNED ENTERPRISES: MBOWENI ALLOCATES 10M TO SAA
- R3 billion was allocated to Land Bank in June. Additional R7 billion will be required by the bank over the medium-term to support its restructuring.
- R10.5 billion has also been allocated to SAA to implement the business rescue plan.
- State Capture Commission of Inquiry has been allocated an additional R63 million from the Department of Justice and Constitutional Development to finalise investigations and produce a close-out report.
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