Finance Minister Tito Mboweni began his first budget speech by quoting Charles Dickens. “It was the best of times, it was the worst of times. It was the age of wisdom, it was the age of foolishness,” he said.
“So too is the present time. As a country, we stand at a crossroads. We can choose a path of hope; or a path of despair. We can go directly to heaven, or as Dickens so politely puts it, we can go the other way,” Mboweni continued.
“As a country, we stand at a crossroads. We can choose a path of hope; or a path of despair. For ordinary South Africans, it has become a difficult time. Administered prices, such as electricity and fuel, have risen,” he added.
Our newest finance minister then said: “Under the leadership of our president, and much like the central character in A Tale of Two Cities, we have, as a country, chosen the difficult path of redemption.” This is what Mboweni believes our redemption will entail:
What the numbers reveal
- Economic growth revised downwards from 1.5% to 0.7% for 2018
- Consolidated budget deficit for 2018/19 revised to 4% of GDP (from 3.6%)
- After rising to 4.2% of GDP in 2019/20, it is expected to stabilise at 4% in outer years
- Gross debt to stabilise at 59.6% of GDP in 2023/24 (Feb Budget projection was 56.2% of GDP in 2021/22)
- Tax revenue for 2018/19 projected to fall R27.4 billion short of February estimate due to VAT refund backlog, underestimation of refunds and slower corporate income tax collections
- Expenditure ceiling to be maintained and set to grow at 1.5% in 2021/22
- No increases in personal income or corporates income tax rates or VAT expected, but personal income tax brackets, levies and excise duties to be adjusted for inflation
- White bread flour, cake flour and sanitary pads to be zero-rated from April 1, 2019 at an estimated cost of R1.2 billion
- Reforms under way at Sars to regularise VAT refund payments and rebuild capacity (reprioritisation of R1.4 billion of budget)
- Implementation of carbon tax postponed from January 1 to June 1, 2019
- Public service wage agreement exceeds budgeted baselines by R30.2 billion over medium term. No additional money allocated, national and provincial departments to absorb costs within compensation baselines.
- Around 85% of increase in wage bill due to higher wages, rather than higher head count
- SAA to receive R5 billion through special appropriation bill to settle debt redeeming between now and March 2019. This will help prevent call on airline’s outstanding government-debt of R16.4 billion.
- SA Post Office receives R2.9 billion to reduce debt levels.
- Sanral receives R5.8 billion to compensate for non-payment of e-tolls, of which R3 billion is an additional allocation
- Reprioritisation of R350 million to recruit more than 2 000 health professionals into public health facilities
- Minister says reconfiguration of SOEs required; parties should be “open-minded” and consider equity partner or close of certain business activities in SAA stable
- New way of thinking required regarding public sector wage bill. Represents about 36% of budget, “sweet spot” is below 30%; public officials must also show restraint
- Size of cabinet the prerogative of president, but should preferably not be more than 25, probably 20
- Beneficial to involve private partners in health sector
- Stabilisation of gross debt to GDP ratio close to 60% not a good development, “sweet spot” is below 50%
Ingé Lamprecht / Moneyweb / The Citizen