Budget 2021: Government slashes spending by a whopping R300 billion

Government’s spending has been reduced by R303 billion from 2020-2021 to 2023-2024, with the total consolidated spending aimed at R2 trillion per year, with more than half allocated to social services.

The 2021 budget review reprioritised and reallocated existing baselines to fund new and urgent priorities.

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56.6% [R1.24 trillion] of the projected spending will be allocated to social services such as culture, health and social development over the medium term.

“The consolidated budget continues to prioritise social objectives to reduce poverty and inequality, with 56.6% of allocations to the learning and culture, health and social development functions over the medium term.

“Spending on economic development, community development and peace and security remain important for socio-economic transformation and safety and security,” said the budget review.

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This is how it will be shared:

• R402.9 billion allocated to learning and culture (basic education, National Student Financial Aid Scheme, university transfers, skills development).
• R248.8 billion to health
• R218.8 billion allocated to community development
• R335.3 billion to social development

But where will the money come from?

Tax revenue of R1.3 trillion is expected to contribute 72.6% of the total spending, with R482.6 billion to be borrowed and a further R32.5 billion from non-tax revenue.

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According to Treasury’s Wessel Moolman – director for accounting and information – money will come from a combination of short-term borrowing as well as domestic long-term loans.

“Along with that, we will bring down some of our cash balances over the period to finance the gross requirements.”

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