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R60bn for SAA and Eskom

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Total consolidated government spending is expected to grow at an average annual rate of 5.1%.

JOHANNESBURG – Total consolidated government spending is expected to grow at an average annual rate of 5.1%, South Africa’s finance minister told the country during his second national budget speech delivered in parliament on Wednesday. 

Mboweni said, “Total consolidated government spending is expected to grow at an average annual rate of 5.1 per cent, from R1.95 trillion in 2020/21 to R2.14 trillion in 2022/23. This is mainly due to mounting debt-service costs. Non-interest spending declines on average over the MTEF in real terms. As a major step towards fiscal sustainability, today we announce a net downward adjustment to the main budget non-interest expenditure of R156.1 billion over the next three years relative to the 2019 Budget projections.”

The total reduction is mainly the result of lowering programme baselines and the wage bill by R261 billion. These are partially offset by additions and reallocations of R111 billion. 

Mboweni said that more than half of this (R60bn) is for Eskom and South African Airways. 

Unpacking the R261 billion in baseline spending reductions

The first part is adjustments on programme spending of about R100 billion. Some of these were announced in the MTBPS. 

Adjustments are mainly in conditional grants for provinces and municipalities. 

For human settlements, adjustments amount to R14.6 billion over the MTEF. There are also adjustments of R2.8 billion to the municipal infrastructure grant.

Over the three years, public transport spending is adjusted by R13.2 billion, mainly on allocations to the Passenger Rail Agency of South Africa and the public transport network grant. The planning and implementation of integrated public transport networks will consequently be suspended in the Buffalo City, Mbombela and Msunduzi municipalities. 

Education infrastructure allocations are adjusted by R5.2 billion over the medium term, while health is adjusted by R3.9 billion over the same period. 

While some of these savings are good for the fiscus, in many cases we are also making difficult and painful sacrifices. It is therefore important that we direct our constrained resources to areas that have a high social impact and have the largest economic multipliers.

“We shall undertake spending reviews to ensure that we achieve this objective,” Mboweni said. 

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