Executive Summary of Mid-Term Budget Speech

“This little aloe is emerging from a long winter. During that winter, the ground became hard. The leaves fell from the trees and the air was bitterly cold. We toiled, hoping for better days. Our people became poorer. Some lost their jobs.”

The above statement sums up Tito Mboweni's presentation. 

The key points are as follows:

• Economic growth is projected at 0.5 per cent for 2019, as long‐term growth estimates have fallen. As a result, revenue projections have been sharply reduced. Spending pressures continue to mount, led by the public service wage bill and state‐owned companies in crisis. The 2019 MTBPS proposes an approach over the medium term that will restore economic growth and stabilise the public finances.
• Over the next three years, consolidated spending will total R6.3 trillion, with 48 per cent of this amount going towards social grants, education and health. Revenue shortfalls and rising spending pressures are threatening government’s ability to maintain existing levels of service provision and infrastructure investment.
• The consolidated budget deficit averages 6.2 per cent of GDP over the next three 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.
• Government has clawed back some of the revenue shortfall through reductions to departmental baselines and slower spending growth in 2022/23. Alone, these reductions are insufficient. Additional measures, particularly on the wage bill, will be required to stabilise the debt outlook and improve the composition of spending.  Additional tax measures are also being considered.
• In August 2019, the paper released by the National Treasury outlined short‐ and medium‐term reforms that can boost economic growth, many of which do not require significant state resources. Interventions to improve the quality of infrastructure planning are beginning to show some results. Further measures to reduce wasteful expenditure will be implemented in the coming year.
• Government is providing medium‐term support to Eskom to secure energy supply and to honour the state’s contractual obligations. The National Treasury, in partnership with the Department of Public Enterprises, is instituting a series of measures to bring discipline to the utility’s finances, and to step up the timeline for restructuring. Debt relief will only be considered once operational efficiencies have been achieved.

To download and read our full summary please click below.

To download the full Mid-Term Budget Policy Statement and the full Mid-Term Budget Speech given by Minister Mboweni, please click below.