South Africa’s 2021 Budget in a Box
Finance Minister Tito Mboweni delivered his 2021 Budget Speech on Wednesday. Here’s what you need to know:
- South Africa’s budget deficit has been revised to 14% of GDP in 2020/21.
- Gross debt has increased from 65.6% to 80.3% of GDP for 2020/21.
- Debt is projected to stabilise at 88.9% of GDP in 2025/26.
- Government has pencilled in a primary surplus (when total revenue exceeds non-interest expenditure) for 2024/25.
- This depends on many things, including a 1.2% annual wage increase over three years for public servants.
- This will result in cuts to the wage bill of R303-billion over the next four years including 2020/21.
- Social grants increased by less than inflation.
- The Land Bank was the only SOE to be bailed out – to the tune of R9-billion over three years.
- The government has allocated R9-billion to the Covid-19 vaccination campaign over the medium term. The balance will be funded by the private sector.
- Debt-service costs will average 20.9% of gross tax revenue over the medium term, that is 21c of every rand is spent servicing interest.
- Total government spending will amount to R2-trillion every year for the next three years.
- Big-ticket items include R402.9-billion on learning and culture, R335.2-billion on social development and R248.8-billion on health in 2021/22.
- Funding for new and urgent priorities (vaccines) is provided through reprioritisation and reallocation of existing baselines.
- No personal tax hikes! The intention to raise R40-billion over the next four years did not materialise, thanks to better-than-expected revenue collection.
- Also, personal income tax brackets will shift upwards by more than the inflation rate of 4%.
- Corporate tax will decline from 28% to 27%.
- Excise duties on alcohol and tobacco rise by a hefty 8% for 2021/22.
- The fuel levy will increase by 15c/litre while the RAF levy will increase by 11c/litre.
- The UIF contribution ceiling will be set at R17,711.58 per month from 1 March.
- Mass public employment programmes are allocated R11-billion. BM