The Mid-term Budget

Count your blessings if you did not have to listen to the budget speech live. After the initial circus caused by the protesting EFF members, a very laboured and sometimes unintelligible speech followed. Reading only the pertinent points in an executive summary will tell you everything you need to know, so here are the important take-aways from the 2022 mid-term budget speech:

  • Treasury has agreed to take over responsibility for between one- and two-thirds of Eskom’s R400 billion debt.
  • The National Energy Crisis Committee will focus on urgently improving the performance of existing power stations and adding new generation capacity.
  • Treasury is “doing everything possible” to prevent South Africa from being grey-listed by the Financial Action Task Force.
  • National Government will be taking over 70% of SANRAL’s R47 billion debt – the balance being for the account of the Gauteng Provincial Government, which will be required to pay for the maintenance of the structures. This means the decision on whether or not to abolish e-tolls rests with the Province.
  • New laws will allow for the establishment of an independent transport regulator.
  • A consolidated Budget deficit of 4.9% of GDP is projected for the current financial year, falling to 3.2% by 2026.
  • The cost of the fire damage to the Parliament Buildings has been quantified, with an allowance of R2 billion made to rebuild the damaged areas.
  • SA Treasury’s total tax revenue is now forecast to be R83 billion above the number budgeted in February.
  • Continued SOE bailouts: R24 billion to roads agency SANRAL to settle debt; R6 billion to Transnet; and R3.6 billion to Denel.
  • An extension of the COVID relief grant over the next two years in the amount of R67 billion. This grant, received by 7.4 million people, was extended in the Budget until 2023. This temporary grant has now been extended for another year and will only end on March 31, 2024.
  • There are also significant allocations to the municipal and provincial road infrastructure (R11 billion) and for Safety & Security (R9 billion).
  • The gross-debt-to-GDP ratio is now expected to peak at 71.4% this year, two years earlier than expected. It is then projected to fall slightly annually, reaching 70% in 2026.
  • We expect real GDP growth of 1.9% in 2022, compared to the estimate of 2.1% in February.

If you still do not understand what to make of it; or think that government is just going through the motions; then you are not alone. South Africans want to see actions, not words. Having to live without electricity for most of the week; or waiting for the police to show up while someone is stealing your garden furniture; driving through potholes; or not having running water – those are the real problems we are facing. But do not despair; at least your rates and taxes bill will arrive on time. And, of course, very efficient SARS will always be banging on your door.

If you are feeling despondent at the moment because of all the things that are going wrong and over which you have no control; then remember to rather focus on those things that you do have control over and make sure they are 100% the way you want them.

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