Mid Term Budget [Highlights]
Mid Term Budget Speech
The Rand dived in the wake of the Mid Term Budget Speech which presented a realistic view of the economic growth and pointed to more national debt over the next few years.
The speech by newly appointed Finance Minister Tito Mboweni tried to be optimistic while dealing with some of the hard issues at hand which is going to see the country experience some really hard times ahead. He described the economy as being at a “crossroads”.
Major areas of spending will include health and education where a budgeted amount of around R5.9 trillion is allocated and R911 Billion on “social development”. R203 Billion will go towards the military and related costs.
Saving SAA & the Post Office (Again)
An amount of R5 Billion has been set aside to help save SAA and another R1.5 Billion for SA Express. The Post Office will be getting R2.9 Billion to try keep it afloat as it takes on its new role handing social service payments.
Tax
No additional taxes are planned for 2019 unless the “economic environment” calls for it. Recent changes at SARS mean that finally, many refunds which should have been handed out and were not will now be distributed.
‘SARS has been collecting less than expected’
Recently SARS has been collecting less than expected and the economy has not been doing well. Treasury previously predicted a 1.5% growth (GDP) but this has now been reviewed down by 50% to a much more modest 0.7%.
More Debt By 2022
National debt is set to increase to 58.5% of GDP by 2022 (that’s an extra 3% over what it is now). Also because National debt is often in foreign currency a weaker Rand can have a negative effect. Recently the Rand has been doing poorly and this accounts for 70% of the anticipated R48 Billion increase in debt.
Download The Speech
You can download the speech transcript here: Mid Term Budget Speech 2018