The National Treasury has taken steps to combat corruption in the country as over R60 million has been allocated to the state capture commission of inquiry while law enforcement agencies are probing R3.5 billion worth of tenders awarded to companies that are not tax compliant.
Tabling the medium-term budget policy statement (MTBPS) before Parliament on Wednesday afternoon, Finance Minister Tito Mboweni said Treasury withdrew emergency procurement processes following “exploitive acts” of corruption when it came to combating the Covid-19 pandemic.
He dismissed claims that the R500 billion relief package was entirely lost to corruption, stating it was mostly used to “cushion the impact” of the pandemic while other aspects will continue to be rolled out over the medium term.
While details and names of all companies awarded Covid-19 related contracts were made public, the South African Revenue Services were however probing successful companies which were not tax-compliant.
“The South African Revenue Services is working with other law enforcement agencies to evaluate R3.5 billion worth of tenders awarded to entities not registered for VAT.”
“The Covid-19 pandemic has given rise to shameful and exploitative acts of corruption. This has overshadowed our collective achievements in saving lives and supporting livelihoods. It is not true that the R500 billion relief package has been entirely lost to corruption,” said Mboweni.
In addition, R63 million had been allocated to the State Capture Commission of Inquiry to finalise investigations and compile a report by the Department of Justice and Constitutional Development, Mboweni said.
“The final part of our duties as captains through the storm is to strengthen the ship… We must continue to defeat the corruption and plug the loopholes,” said Mboweni.
The government has allocated R6.8 billion to the Department of Social Development in prioritising the social relief of distress grant, which has been extended until January next year.
With 2.2 million people having lost their jobs during the Covid-19 pandemic, the government has prioritised social development as it includes programmes aimed at income protection, social welfare and reducing poverty.
The longer than expected tobacco ban during the Covid-19 lockdown levels was one of the factors that contributed to low tax revenue, as tax revenue for the 2020/21 financial year now stand R312.8 billion lower than what was projected in the 2020 budget review.
This despite revenue collection being revised down by R8.7 billion in June’s adjusted budget review.
This deterioration was in line with the revised economic growth projections and expected tax performance following the Covid-19 pandemic.
The government has resisted opposition to it providing further bailouts to embattled national airline SAA, allocating R6.5 billion in the Medium Term Budget Policy Statement (MTBPS) to the airline for settling its guaranteed debt and interest and R10.5 billion to implement its business rescue plan.
The MTBPS states this allocation was mainly funded through reductions to the baselines of national departments and their public entities, and provincial and local government conditional grants.
The MTBPS made no mention of private sector funders, equity investors and partners for a future restructured SAA.
The reduction of the public sector wage bill is one of the main fiscal measures being implemented in stabilising the country’s debt over the next five years, as it accounts for about one-third of the consolidated budget.
Following the Covid-19 pandemic which led to steep economic decline, the country’s economy is expected to contract by 7.8% in 2020 and to return to real GDP growth of 3.3% in 2021.