Finance Minister Tito Mboweni on Wednesday 20 February made his maiden National Budget speech in Parliament in Cape Town. He said it was areflection of the national’s financial situation.
On economic outlook, he said that the economy would not grow as projected due to slow global economic growth. It had been forecast to grow 1.8% in 2019 and 2.1% in 2020 but have been revised to 1.5 % in 2019 and 2.1 % in 2021. Consumer inflation is projected for 5.2% in 2019, a rise from 4.7% in 2018.
In regards to tax collection, tax revenue has been revised down by R15.4 billion in comparison last to October 2018 estimates.
Mr. Mboweni went to propose additional revenue measures of R15 billion in 2019/20, and electing a slight upward adjustment of the tax-free threshold for personal income taxes. However, leaving the current personal income tax brackets unchanged. Together these will raise R12.8 billion.And there will be an increase on excise duties on fuel, alcohol and tobacco.
On expenditure, Mr. Mboweni said total non-interest spending over the next three years will be R5.87 trillion.The largest allocations are R1.2 trillion for learning and culture, R717 billion for health services (including National Health Insurance) and nearly R900 billion for social development.
In regards to stabilising and reducing debt, Mr. Mboweni said that spending will amount to R1.83 trillion while revenues are R1.58 meaning there will be a R243 billion deficit. The interest expenditures will be R209.4 billion.
On reconfiguring state-owned enterprises, Mr. Mboweni said that the risk Eskom poses to the economy and state finances will be partially mitigated by R69bn allocation at R23bn per year over three years.
However, the financial support will be on condition. A Chief Reorganisation Officer(CRO) will be jointly appointed by Minister of Finance Mboweni and Public Enterprises Minister Pravin Gordhan with the explicit mandate of delivering on the recommendations of the Presidential Task Team. All state-owned enterprises in need of state support will be required to appoint a CRO.
On managing the public sector wage bill, Mr. Mboweni outlined steps to reduce the unsustainable public wage bill. The national and provincial compensation budgets will be reduced by R27 billion over the next three years.Early retirement for older public servants will be introduced. There will be limiting of overtime, bonus payments and pay progression. This measures are expected to saveR4.8 billion in 2019/20, R7.5 billion in 2020/21 and R8 billion in 2021/22.
In addition, Members of Parliament and provincial legislatures and executives at public entities will not be receiving a salary increase this financial year.