Similar to the 2018 Medium-Term Budget Policy Statement (MTBPS) this budget was very closely watched with many hoping for clarity on the future direction. In the current environment there are more questions than answers and more groups with different views and interests than what the fiscus can allow.
The Minister of Finance, Mr. Tito Mboweni in his first budget speech spoke honestly about the challenges that South Africa faces and presented a budget built on six fundamental prescripts, which are:
Achieving a higher rate of economic growth
Increasing tax collection
Reasonable, affordable expenditure
Stabilising and reducing debt
Reconfiguring state-owned enterprises
Managing the public sector wage bill
In a South African context these six areas have many faces and will require good leadership from government. At the same time the minister said that he expects a slower growth for South Africa, than what was predicated in the Medium-Term Budget Policy Statement (MTBPS). However, the minister remained optimistic in saying that the country is continuing on a steady recovery trajectory, after the 2018 technical recession. It is expected that real GDP growth in 2019 will rise to 1.5%, from an excepted 0.7% in 2018 and then strengthen moderately to 2.1% in 2021.
From the minister’s speech is clear that significant emphasis will be placed on the redirecting SARS to focus on tax collection and we are encouraged by the minister’s comments that specialist units will be (re)introduced and the appointment of a new commissioner. We believe these are steps in the right direction to increase tax collection.
The minster also alluded to some expenditure cuts however, expenditure will be higher than income, with an expected short fall of R243bn for the year. Some of the cost cutting measures included in the speech is an “early retirement framework” for public servants. This will save an estimated R4.8bn in 2019/20, R7.5bn in 2020/21 and R8bn in 2021/22.
Guided by the president, the budget spend allocation focused on five priorities including the acceleration of inclusive economic growth and creation of jobs. The allocation of R1.1bn over the next three years to the Jobs Funds and a further R481.6m allocation to expand the small business incubation programme of the Small Enterprise Development Agency is very promising and well supported.
Other priorities also include the improvement of the education system and develop of skills including for the future. A total of R30bn has been allocated to build new schools. Considerable spend allocations were also made towards improving the conditions of life for all South Africans, especially the poor; measures to fight corruption and state capture as well as to strengthen the capacity and capability of the state to address the needs of the people.
The budget also accommodated some of the State-Owned Enterprises (SOEs) however the Minister questioned whether South Africa still needs some of these enterprises. Its is especially Eskom’s allocation of R23bn per year that will place pressure on the fiscus.
Overall this budget is a well-balanced budget and provide South African with a better view of future. We call on all South Africans, those in the public and private sector to work together, to lead together to a more prosperous South Africa.
Nico Esterhuizen (FCCA) is the fellow member of the ACCA (Association of Chartered Certified Accountants). Currently, he is the General Manager of SAIA (South African Insurance Association). SAIA is the industry association for the non-life insurance industry representing more than 60 insurers in South Africa.
He represents SAIA at various working groups of the Global Federation of Insurance Associations (GFIA) which regularly provide input on the projects of the International Association of Insurance Supervisors (IAIS).
Founded in 1904, ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants and has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability.
LEGAL DISCLAIMER: This Message Board accepts no liability of legal consequences that arise from the Message Boards (e.g. defamation, slander, or other such crimes). All posted messages are the sole property of their respective authors. The maintainer does retain the right to remove any message posts for whatever reasons. People that post messages to this forum are not to libel/slander nor in any other way depict a company, entity, individual(s), or service in a false light; should they do so, the legal consequences are theirs alone. Bizcommunity.com will disclose authors' IP addresses to authorities if compelled to do so by a court of law.