South Africa Budget: economy expected to grow by 3.3% in 2021 – Finance Minister

PUBLISHED: Wed, 24 Feb 2021 14:37:13 GMT
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Tabling South Africa’s 2021 Budget, Minister Tito Mboweni said that government will stabilise debt at 88.9 per cent of GDP in 2025 and 2026. The Minister reported that South Africa’s economy is expected to rebound by 3.3 per cent this year, following a 7.2 per cent contraction in 2020.

Download the ministers full speech here.

Watch this CNBC Africa panel of experts as they unpack the much anticipated 2021 budget speech by Finance Minister, Tito Mboweni.

Budget Highlights

Budget Framework

  • The budget deficit has been revised to 14 per cent of GDP in 2020/21 in response to the spending and economic pressures of the COVID-19 pandemic.
  • Gross debt has increased from 65.6 per cent to 80.3 per cent of GDP for the year 2020/21.
  • The 2021 Budget proposes measures to narrow the main budget primary deficit from 7.5 per cent of GDP in the current year to 0.8 per cent in 2023/24.
  • The proposed fiscal framework will stabilise debt at 88.9 per cent of GDP in 2025/26.
  • Government will roll out a free mass COVID-19 vaccination campaign for which R9 billion has been allocated in the medium term.
  • Over the medium term, debt-service costs are expected to average 20.9 per cent of gross tax revenue.

Spending Programs

  • Total consolidated spending amounts to R2 trillion each year over the medium term.
  • The bulk of the spending is allocated to learning and culture (R402.9 billion), social development (R335.2 billion) and health (R248.8 billion) in 2021/22.
  • The fastest-growing functions over the medium term are economic development, community development and general public services.
  • The majority of funding for new and urgent priorities is provided through reprioritisation and reallocation of existing baselines.

Tax Proposals

  • To support economic recovery, government will not raise any additional tax revenue in this budget.
  • The personal income tax brackets and rebates will increase above the inflation rate of 4 per cent.
  • Government will increase excise duties on alcohol and tobacco by 8 per cent for 2021/22.
  • Inflation-related increases of 15c/litre and 11c/litre will be implemented for the general fuel levy and the RAF levy, respectively, with effect from 7 April 2021.
  • The UIF contribution ceiling will be set at R17 711.58 per month from 1 March 2021.
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