WITH the country becalmed with the twin doldrums of the COVID- 19 pandemic and a very weak economy, Finance Minister Tito Mboweni didn’t have much wriggle room, but has resisted in imposing an austerity budget. On the contrary, he sounded somewhat upbeat about future prospects, predicting a 2021 growth rate rebound of 3,3%.
Emphasis was placed getting the country’s ‘house in order’ with a plea for greater financial discipline and sustainability – let’s see if these lofty ideals can be translated into practice by the more than 200 errant municipalities and SOE’s that have enjoyed more than R168bn in bailouts since 2009. No mention was made of the individual liabilities of Eskom or the R10bn SAA vanity project…
The budget highlighted:
- R9bn allocated for COVID 19 relief, for vaccine purchases and its roll out.
- More than 56% of the country’s R1,35tn income would be spent on social services
- The budget shortfall of between 13 – 15% of GDP, which would be financed from borrowing a further R500bn
- Debt repayments represented 88% of GDP, which Mboweni said required a herculean effort to reduce to manageable levels by 2025. “We owe a lot of people an awful lot of money” he lamented.
- Public sector employee compensation is set to rise from R83.5bn to R11,0bn in this financial year. This translates into a 2.1% salary increase in 2021 for public servants, reducing to 1,2% for the next two years. Teachers fare even worse with just an 0,8% increase this year, but pegged for the next 3 years. (This spells trouble in this sector and ultimately is to the detriment of learners.
- 7 bn has been allocated to settle 1 409 land claims.
- The Land Bank is to receive a R7bn bailout.
- R4bn has been allocated to township and rural enterprise development.
- Just R540m to stimulate tourism through an equity partnership fund.
- Corporate income tax has been lowered to 27% as an incentive for private sector and foreign investment.
- Modest assistance has been provided to those receiving assistance grants with old age pensions being increased by a miserly R30/month and foster and child assistance grants by, wait for it, R10/month.
- Good news for girl learners from low income families is that government has allocated R678,3 m for the provision of free sanitary products.
As with most finance ministers, you give with one hand and take back with the other.
The good news for low and medium income earners will be that they should have a little more disposable income as the tax brackets have been increased by 5% which will equate to earners having a collective R2,2bn more of disposable income.
The bad news is that excise duty on wine, beer and spirits, and cigarettes will increase by 8%, putting 14c on a bottle of beer, 26c on a bottle of wine and R5,50 per 750ml bottle for spirits drinkers. As usual, smokers will pay extra, an additional R1,20 for their packet of 20 fags.
If you drive a vehicle, you’ll pay an additional 27c/litre for fuel – 15c/litre general fuel levy and 11c/litre which will go to the bankrupt Road Accident fund to help it balance its books
If you were looking for a silver lining, keep looking, but like the curates egg, this budget was good in parts.