17 Mar Morar Post Budget Speech Thoughts
On 24 February, our Finance Minister, Mr Tito Mboweni, delivered the National Budget Speech, outlining the government’s priorities for 2021.
“…getting our fiscal house in order is the biggest contribution we can make to support our Economic Reconstruction and Recovery Plan… We remain adamant that fiscal prudence is the best way forward. We cannot allow our economy to have feet of clay.”
Mr Mboweni spoke about how getting our fiscal house in order would be the biggest contribution that we can make to support our Reconstruction and Recovery Plan.
His speech was aimed at closing the main budget primary deficit. The reality of the dire position of our public finances is becoming clearer.
He went on to address corruption, stabilising government debt and the electricity crisis He touched on digital communications, water & freight transport issues, as well as economic transformation, land, tourism and small business development initiatives.
Some Figures for you
GOVERNMENT SPENDING IN 2021/22
R 335.3bn – 16.6%
R 272.3bn – 13.5%
R 269.7bn – 13.4%
R 248.8bn – 12.3%
R 218.8bn – 10.8%
R 208.6bn – 10.3%
Peace and security
R 207.5bn – 10.3%
R 119.6bn -5.9%
Post-school education and training
While there are efforts to try and improve tax collection, due to the job losses that have occurred during the pandemic, this is the largest tax shortfall on record.
- To support economic recovery, government will not raise any additional tax revenue in this budget.
- The personal income tax brackets and rebates will increase above the inflation rate of 4 per cent.
- Government will increase excise duties on alcohol and tobacco by 8 per cent for 2021/22.
- Inflation-related increases of 15c/litre and 11c/litre will be implemented for the general fuel levy and the RAF levy, respectively, with effect from 7 April 2021.
- The UIF contribution ceiling will be set at R17 711.58 per month from 1 March 2021.
Mr Mboweni closed his speech by talking about path to recovery (which may be challenging, but achievable) with the 2021 budget framework below:
The budget deficit has been revised to 14 per cent of GDP in 2020/21 in response to the spending and economic pressures of the COVID-19 pandemic.
- Gross debt has increased from 65.6 per cent to 80.3 per cent of GDP for the year 2020/21.
- The 2021 Budget proposes measures to narrow the main budget primary deficit from 7.5 per cent of GDP in the current year to 0.8 per cent in 2023/24.
- The proposed fiscal framework will stabilise debt at 88.9 per cent of GDP in 2025/26.
- Government will roll out a free mass COVID-19 vaccination campaign for which R9 billion has been allocated in the medium term.
- Over the medium term, debt-service costs are expected to average 20.9 per cent of gross tax revenue