Dear Fellow South African,
Last week, Minister of Finance Enoch Godongwana presented a Budget that will accelerate the momentum of inclusive growth, create jobs and tackle poverty.
Every budgetary allocation is a developmental choice: ensuring there are teachers in classrooms, nurses and doctors in clinics, electricity and basic services in homes and businesses, infrastructure to grow the economy, and employment opportunities for communities.
After a prolonged period of economic uncertainty, this Budget builds on the progress made over the last few years to stabilise, reform and transform our economy. Improvements in public finances, stabilising debt, a narrowing budget deficit, credit rating upgrades and improved market confidence all signal the beginning of an economic recovery.
A stable macroeconomic environment boosts investor confidence and increases government’s capacity to invest in both growth and poverty relief without compromising sustainability.
The stabilisation of public finances gives us space to accelerate public investment, sustain the social wage, and direct resources to reforms that drive growth and job creation.
The social wage accounts for over 60% of government spending after interest payments. The allocation for this financial year will enable us to provide healthcare services to 84% of the population, social grants to 26.5 million beneficiaries and free basic services to over 11 million indigent households. It will support approximately 13.6 million learners at school.
This is a redistributive budget that reduces inequality, builds the capabilities of our people and strengthens the foundations for inclusive growth.
Basic education is one of those key foundations. We will be allocating additional spending to employ more educators. Additional funds have been allocated to the early childhood development grant to reach an additional 300,000 children and to align the National School Nutrition Programme to food inflation.
The Budget supports inclusive growth by accelerating public investment, particularly on infrastructure. Improved infrastructure lowers the cost of doing business, raises productivity and supports our country’s exports.
Over the next three years, public spending on infrastructure will exceed R1 trillion to build and maintain roads and rail lines, expand energy infrastructure, and build and maintain water and sanitation infrastructure.
Government alone cannot finance the scale of infrastructure our country needs. We are therefore mobilising investment from private and other sources, and opening the space for public-private partnerships. As we encourage private investment in electricity, rail and port operations, we are maintaining state ownership of strategic national infrastructure.
Under Operation Vulindlela, government departments and public entities are undertaking impactful reforms in energy, telecommunications, water and logistics.
The Budget acknowledges that many municipalities are in financial distress, driven by weak revenue collection, poor management and substantial service delivery backlogs.
Many municipalities are not spending appropriately. For several years, water and electricity revenue has not been invested in infrastructure maintenance or expansion, but has been redirected to cover other municipal costs.
Local government finances have to be placed on a more sustainable footing to support the delivery of basic services. Over the medium term, R19.2 billion will be reallocated to the reform of electricity, water, sanitation and solid waste trading services in metros. These allocations will be linked to performance against clear targets.
The Municipal Infrastructure Grant is being reformed to address underspending and misuse of funds. Over the next three years, R86.9 billion has been allocated to support the provision of free basic services to indigent households.
This year’s budget reflects government’s goals of inclusive growth and job creation through additional support for mass public employment programmes and relief for small businesses.
An additional R4.1 billion has been allocated to the Presidential Employment Stimulus to provide work opportunities to more young South Africans.
To ease the regulatory burden for small businesses, the threshold for businesses to register for VAT has been more than doubled. For small business owners who wish to sell or transfer their businesses, the capital gains tax exemption has also been significantly increased. Together, these measures will help small and informal businesses to grow and employ more South Africans.
This year’s Budget focuses on three imperatives: maintaining fiscal sustainability, driving inclusive growth and protecting society’s most vulnerable. It is a balanced budget that reflects the realities of our economy, limited financial resources, high unemployment and urgent infrastructure needs.
As we build on the momentum of our recovery, we will continue to be guided by fiscal discipline, structural reform, targeted investment and an overarching commitment to improving the material conditions of every South African.
With best regards,
Cyril Ramaphosa
Trash Pocky
Fun South African Fact: In 2006, South Africa became the first African country and the fifth country in the world to recognize same-sex marriage.
curio
Do not argue with a fool because he will drag you down to his level and then beat you with experience.