Budget 2016 in a nutshell

2/24/2016


"We cannot spend money we do not have. We cannot borrow beyond our ability to repay," say Minister of Finance, Pravin Gordhan during his 2016 Budget speech in Parliament.

"We do so in a spirit of frankness, both about our challenges and the opportunity to turn our economy’s direction towards hope, confidence and a better future for all. Low growth, high unemployment, extreme inequality and hurtful fractures in our society – these are unacceptable to all of us. I have a simple message. We are strong enough, resilient enough and creative enough to manage and overcome our economic challenges."

In brief, we propose the following: 

 Against the background of slow growth, rising debt and higher interest rates, the pace of fiscal consolidation will be accelerated. The budget deficit will be reduced to 2.4 per cent by 2018/19.  The expenditure ceiling is cut over the next three years by R25 billion, mainly by curtailing personnel spending.

 Tax increases amounting to R18 billion in 2016/17 are proposed, and a further R15 billion a year in 2017/18 and 2018/19.

 An additional R16 billion is allocated to higher education over the next three years, funded through reprioritisation of expenditure plans.

 Energy investment amounts to R70 billion this year and will be over R180 billion over the next three years, as construction of the Medupi, Kusile and Ingula power plants is completed.

 Transport and logistics infrastructure accounts for nearly R292 billion over the next three years under Minister Peters’ oversight. Transnet is acquiring 232 diesel locomotives for its general freight business and 100 locomotives for its coal lines. There is R3.7 billion to upgrade the Moloto Road, R30 billion for provincial roads maintenance, R18 billion for bus rapid transit projects in cities and refurbishment of over 1700 Metrorail and Shosholoza Meyl coaches.

 R62 billion is allocated for the housing subsidy programmes of Minister Sisulu’s department, and R34 billion for bulk infrastructure and residential services in metropolitan municipalities.  R28 billion will be spent over the MTEF on improving health facilities and R54 billion on education infrastructure.

 Under Minister Mokonyane’s leadership, the next phase of the Olifants River water scheme is in progress, completion of the supply to Lukhanji Municipality in the Eastern Cape, completion of the Wolmaransstad wastewater treatment works and construction of the Polihali Dam as part of the Lesotho Highlands project.

 The Industrial Development Corporation continues to play a leading role in financing manufacturing and beneficiation. It plans to invest R100 billion over the next five years, including R23 billion set aside to support black industrialists.

 We have completed a R7.9 billion capital transfer to the Development Bank of Southern Africa, approved in 2013, which enables it to expand lending and implementation support to municipalities, and to complement private sector funding of strategic infrastructure projects. The Bank aims to increase lending by R48 billion over the next three years. Initiatives to reinforce municipal implementation capacity have been prioritised.

  The Land Bank has set aside a concessionary loan facility to assist farmers in recovering from the impact of the current drought conditions. Over the next three years R15 billion is allocated for land acquisition, farm improvements and expanding agro-processing opportunities.

 R4.5 billion is budgeted over the medium term for revitalizing health facilities in the eleven NHI pilot districts, and related health system reforms. An additional R740 million has been allocated to strengthen TB programmes to encourage early detection and treatment, and R1 billion for expansion of the antiretroviral treatment programme.

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