Overview of Mid-term Budget Policy Statement

Finance Minister Tito Mboweni delivered his medium-term budget statement in parliament yesterday.here below is the economic overview.

F Economic growth is now projected at 0.5%

F Revenue have been sharply reduced

F Spending pressures continue to build up, compelled by the public service wage bill and state owned companies are in trouble

F Public finances have gotten worse since 2019 budget because of lower growth, tax revenue and an increase in support to state owned companies.

F The 2019 Mid-term budget policy statement (MTBPS) proposed an approach over the medium term that if implemented will restore the momentum of economic growth and calm the public finances

F Over the next three years, merged spending will total R6,3 trillion, with 48 cents of this amount going towards social grants, education and health.

F Revenue shortfalls and rising spending pressures are threatening government’s ability to maintain existing levels of service provision and infrastructure investment.

F The fused budget delict averages 6, 2% of GDP over the next 3 years. Debt and debt service costs will continue to increase, with the debt to GDP ratio now estimated at 71.3 per cent in 2022/23

F Tax measures will also be considered

F Government is providing medium term support to Eskom to secure energy supply and to honor the states contractual agreements.

F The National treasury , in partnership with the department of public enterprises, is instituting a series of measures to bring discipline to the department of finance and step up the timeline for restructuring

F Debt relief for Eskom will only be considered once operational efficiencies have been achieved.

F Interventions to improve the quality of infrastructure , planning is beginning to show some results

F Further measures to reduce wasteful expenditure, including limiting claims against the state will be implemented in the coming year.

No wage increase

According to #Timeslive , Mboweni told the parliament that senior government officials won’t get a pay raise for the foreseeable future adding to say these measure are to reduce the public sector wage bill, and Cabinet, premiers and MEC’S salaries will remain the same, and all domestic travel will be on economy class tickets.

E-tolls not going anywhere

Times live reported saying the e-toll system would remain in its current form, he said the decision was taken after consulting key players in the transport sector. Clearly saying that the needs to build a culture of payment, government services can be sustained. Adding to say people must appreciate the services provided to them, and just like they go to retail store to buy bread they should pay for the use of service.