Medium-term Budget: Key Takeaways

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The medium-term budget policy statement is a central part of our planning as a country designed to outline how we spend the scarce resources for the benefit of all South Africans – and yesterday’s speech was no different. This Policy Statement provides us with an opportunity to take stock of the strides we have taken in the year as well as the ones we’ve missed. This is done in a data-driven way, providing credible evidence to judge our collective performance as a society.

However, it is more than a set of numbers, reams of data, charts, graphs or words.

Minister of Finance Tito Mboweni at his presser at parliament during his Medium Term Budget Policy Statement. October 24, 2018. PICTURE: ESA ALEXANDER/SUNDAY TIMES

Our economic performance should be measured by whether people are gainfully employed, whether our children are learning in decent schools and whether we have health care facilities that are up to standard. There are people behind the statistic and the numbers, real-life people whose lives are greatly affected by the government’s economic policy.

Yesterday’s Medium-Term Budget Policy Statement is an opportunity to restore trust between government and society. South Africans correctly expect more from their government. They are right to expect that their money is spent wisely and productively and that it goes to meet their basic needs.

 

There was a lot discussed in yesterdays medium-term budget speech here are the key takeaways.

Economics

  • Gross debt is expected to stabilise at 59.6% of GDP in 2023/24.
  • GDP growth revised downwards to 0.7 from 1.5% in 2018 following a recession in the first half of the year.
  •  GDP growth is expected to recover gradually to 2.3% by 2021
  • Global economy expected to continue growing at 3.7%

 

The Medium-term expenditure framework commits public resources of R5.9trn over the next three years. Of this amount:

  • R3.3trn or 56.2% t will be allocated to education, health, the provision of water and electricity services, and social grants.

Government is proposing reprioritisation of R32.4bn over the next three years. Of this amount:

  •  R15.9bn goes towards faster-spending infrastructure programmes.
  • R16.5bn will be allocated to various programmes, including recapitalising the South

African Revenue Service (SARS), a minimum wage for community health workers, critical posts and goods and services in health, and streamlining the management of the justice system.

  •  In addition, changes to grant structures amounting to R14.7 billion will promote upgrading of informal settlements in partnership with communities.
  • Housing subsidies amounting to R1 billion will be centralised to better support middle- and lower-income home buyers.
  • R3.4 billion is allocated to drought relief, mostly to upgrade water infrastructure aside funding for this purpose.

The Department of Women has developed a framework to provide free sanitary towels to learners from low-income households. The project rollout is funded through the provincial equitable share.

 

State-Owned entities

South African Airways will receive R5 billion through a special appropriation bill to settle debt redeeming between now and March 2019. This will help to prevent a call on the airline’s outstanding debt of R16.4 billion, which is guaranteed.

  • R1.2 billion is allocated to South African Express Airways.
  • The South African Post Office receives R2.9 billion to reduce debt levels

National Health Insurance

R166 million added to the national health insurance (NHI) indirect grant (health facility revitalisation) component to procure medical equipment and to design a new academic hospital in Limpopo.

Tax Changes

In 2019 annual adjustments to personal income tax brackets, levies and excise duties in line with inflation are expected.

  • White bread flour, cake flour and sanitary pads will be zero-rated from 1 April 2019.

Students

  • The Department of Higher Education and Training is developing a funding framework to clarify students’ food, book, transport and accommodation allowances, and the obligations required of bursary students during and after their studies.
  • Over the medium term, an estimated R61.5 billion in revenue from the skills development levy will continue to expand participation in leadership, internships and skills development programmes.

Land reform

Government is working with the Land Bank to accelerate land reform and maintain the productive use of transferred land.

  • Under the Land Reform Programme, the government will provide 30-year leases, enabling the Land Bank to extend loans to emerging farmers.
  • The Land Bank will use a combination of loans and grants to increase production through the Black Producers Commercialisation Programme. Funding from the comprehensive agricultural support programme grant will be reprioritised to produce foot-and-mouth disease vaccines.

There is a lot of information to digest here, and you don’t have to take it in all at once – as it can quickly become overwhelming. Its important as citizens of the country to educate ourselves on its economic state and how we can make a difference to our own back pockets.

To educate yourself further on how you can stretch your money further too… click on the link below to find out more…

https://savemoney.co.za/

 

 

 

 

 

 

 

 

 

Source: https://www.cnbcafrica.com/insights/budget-day/budget-2018-sa/2018/10/24/sas-mtbps2018-key-takeaways/

 


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