Finance Minister Malusi Gigaba delivered his maiden medium-term budget policy statement in parliament on Wednesday. The statement sets out government spending priorities for the next three years.
The highlights included:
- South Africa slashing its projected GDP growth forecast for 2017 by almost half, from 1.3 percent forecast in the February budget to 0.7 percent;
- Revisons to the 2017 growth forecast reflected a significant deterioration in business and consumer confidence over the past year;
- South Africa’s public debt service costs would rise steadily to consume 15 percent of the country’s main budget revenue by 2020/21;
- South Africa’s tax revenue was expected to fall far short of budget projections at R50.8 billion – the largest shortfall in revenue collection since the 2009 recession;
- Treasury estimated stabilising gross debt below 60 per cent of GDP over the coming decade would require spending cuts or tax hikes amounting to 0.8 per cent of GDP (amounting to R40 bln);
- South Africa’s budget deficit was expected to widen to 4.3 percent of GDP in the next financial year due to tax revenue shortfalls, weak growth and measures to shore up struggling state-owned enterprises;
- South African Airways would receive a further R4.8 billion from the state’s coffers in the current financial year with the money coming in part from the disposal of a portion of the state’s Telkom shares;
- South Africa’s contingency reserve would be cut down to R16 billion over the next three financial years (R3 billion for 2017/18, R5bln tin 2019/20 and R8 bln in 2020/21) to offset revenue shortfalls;
- Major funding shortfalls were expected, preventing government from fully covering students studying at universities; and
- Legislation was being drafted to provide a legal framework to establish a National Health Insurance fund.
- South Africa has slashed its projected gross domestic product (GDP) growth forecast for 2017 by almost half, from 1.3 percent forecast in the February budget to 0.7 percent, as a result of continued decline in business and consumer confidence that has gathered pace since 2014.
- National Treasury was considering tax hikes and spending cuts as it tries to stabilise gross debt below 60 percent of GDP, the medium-term budget policy statement, tabled in Parliament on Wednesday, revealed.
- South Africa’s public debt service costs will rise steadily to consume 15 percent of the country’s main budget revenue by 2020/21, according to projections in the medium-term budget policy statement released on Wednesday.
- South African Airways (SAA) will receive a further R4.8 billion from the state’s coffers in the current financial year, Finance Minister Malusi Gigaba confirmed in his first medium-term budget policy statement on Wednesday, with the money coming in part from the disposal of a portion of the state’s Telkom shares.
- South Africa’s budget deficit is expected to widen to 4.3 percent of GDP in the next financial year due to tax revenue shortfalls, weak growth and measures to shore up struggling state-owned enterprises, National Treasury said in its medium-term budget policy statement on Wednesday.
- Despite South Africa’s ruling party, the African National Congress, earlier this year vowing that free higher education could become a reality as early as 2018, Wednesday’s medium-term budget policy statement (MTBPS) revealed glaring gaps in funding for the country’s students. According to the MTBPS, the National Student Financial Aid Scheme (NSFAS) in 2016 gave 225,950 university students with a family income of less than R122,000 financial assistance, which amounted to 30 percent of undergraduate students.
- Gigaba said government was planning to upgrade the country’s key ports of entry in a bid to improve regional trade and curb slow economic growth.
- Finance Minister Malusi Gigaba on Wednesday said Treasury’s contingency reserve would be cut down to R16 billion over the next three financial years. In his maiden medium-term budget policy statement (MTBPS), Gigaba said the paring down of the reserve funds to R3 billion for 2017/18, R5 billion in 2019/20 and R8 billion in 2020/21 would help offset revenue shortfalls.
- Treasury was working closely with the department of health to expand the rollout of the national health insurance (NHI) service “in a progressive and affordable manner”, South Africa’s medium-term budget policy statement, the policy document spelling out government’s spending priorities over the next three years, said.
- A team of experts from National Treasury will work with the department of public enterprises to correct governance and financial management problems at Eskom, Finance Minister Malusi Gigaba said in his medium-term budget policy statement on Wednesday. He singled out the power utility as a source of particular concern for government, given the company’s pivotal role in the economy and the fact that it had government guaranteed loans of some R250 billion.
- Details of the budget policy proposal would be announced in the main budget in February next year.
– African News Agency (ANA)