BUDGET 2021 - National Treasury

BUDGET 2021

BUDGET REVIEW

Budget Review 2021

National Treasury Republic of South Africa

24 February 2021

ISBN: 978-0-621-49079-4 RP: 06/2021

The Budget Review is compiled using the latest available information from departmental and other sources. Some of this information is unaudited or subject to revision.

To obtain additional copies of this document, please contact:

Communications Directorate National Treasury Private Bag X115 Pretoria 0001 South Africa Tel: +27 12 315 5944 Fax: +27 12 407 9055

The document is also available on the internet at: .za.

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RSABUDGET2021

ECONOMIC OUTLOOK

? Government will support the economic recovery by extending short-term economic support and undertaking reforms to lower the cost of doing business and stabilise the public finances.

? Real GDP is expected to grow at 3.3 per cent in 2021 and 2.2 per cent in 2022. ? The global economic outlook is uncertain; however, additional policy stimulus packages and successful rollout of COVID-19 vaccines will

boost global growth. ? A successful rollout of COVID-19 vaccines will support the economic recovery and global trade. ? Government will take steps to promote faster growth by stabilising electricity supply, supporting industries with high employment.

potential and undertaking partnerships with the private sector. ? Operation Vulindlela is supporting the implementation of key structural reforms, but faster progress is needed to generate an economic

recovery.

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 PROGRAMMES

? 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.

RSABUDGET2021

KEY BUDGET STATISTICS

A full set of 2021 Budget data can be found in the statistical tables at the back of the Budget Review. The data on this page may differ from the statistical annexure due to classification, definition and rounding.

BUDGET REVENUE, 2021/22

R billion

TAX REVENUE

1 365.1

of which:

Personal income tax

516.0

Corporate income tax

213.1

Value-added tax

370.2

Taxes on international trade and transactions

54.0

Non-tax revenue

32.5

Less: SACU payments

-46.0

Main budget revenue

1 351.7

Provinces, social security funds and public entities

168.7

Consolidated budget revenue

1 520.4

As percentage of GDP

Tax revenue

25.5%

Main budget revenue

25.3%

MACROECONOMIC PERFORMANCE AND PROJECTIONS

Percentage change

Household consumption Gross fixed-capital formation Exports Imports Real GDP growth CPI inflation Current account balance (% of GDP)

2017

2.1 1.0 -0.7 1.0 1.4 5.3 -2.5

2018 Actual

1.8 -1.4 2.6 3.3 0.8 4.6 -3.5

2019

1.0 -0.9 -2.5 -0.5 0.2 4.1 -3.0

2020 Estimate

-5.9 -18.4 -10.9 -16.5 -7.2

3.3 1.7

2021 2022 Forecast

2.9 2.4 -2.4 3.9 5.7 3.0 6.3 4.6 3.3 2.2 3.9 4.2 -0.1 -1.0

2023

2.0 3.9 2.8 2.5 1.6 4.4 -1.4

CONSOLIDATED FISCAL FRAMEWORK

R billion/percentage of GDP Revenue

Expenditure

Budget balance

Gross domestic product

2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

Outcome

Estimate Medium-term estimates

1 350.3 1 447.8 1 530.5 1 362.7 1 520.4 1 635.4 1 717.2

28.7% 29.4% 29.7% 27.7% 28.4% 28.9% 28.6%

1 540.9 1 643.6 1 822.3 2 052.5 2 020.4 2 049.5 2 095.1

32.8% 33.4% 35.4% 41.7% 37.7% 36.2% 34.9%

-190.6 -195.7 -291.8 -689.8 -500.0 -414.1 -377.9

-4.1% -4.0% -5.7% -14.0% -9.3% -7.3% -6.3%

4 698.7 4 924.0 5 148.9 4 921.0 5 352.2 5 666.3 5 997.2

DIVISION OF NATIONALLY RAISED REVENUE

R billion/percentage of GDP

2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

Outcome

Estimate Medium-term estimates

DIVISION OF AVAILABLE FUNDS

National departments

592.6 634.3 749.7 804.5 763.3 736.3 739.0

Provinces

538.6 572.0 613.4 628.3 639.5 643.3 646.8

Local government

111.1 118.5 123.0 138.5 138.1 146.1 148.4

Non-interest allocation 1 242.3 1 324.8 1 486.2 1 571.3 1 552.5 1 557.8 1 567.5

PERCENTAGE SHARES

National departments

47.7% 47.9% 50.4% 51.2% 49.5% 48.3% 48.2%

Provinces

43.4% 43.2% 41.3% 40.0% 41.5% 42.2% 42.2%

Local government

8.9% 8.9% 8.3% 8.8% 9.0% 9.6% 9.7%

CONSOLIDATED SPENDING BY FUNCTIONAL AND ECONOMIC CLASSIFICATION, 2021/22

R billion

Compensation Goods and Capital spending Current transfers Interest

of employees services

and transfers and subsidies payments

Basic education Post-school education and training Arts, culture, sport and recreation Health Social protection Social security funds Community development Industrialisation and exports Agriculture and rural development Job creation and labour affairs Economic regulation and infrastructure Innovation, science and technology Defence and state security

208.2

27.7

12.4

2.2

4.2

3.3

150.7

80.1

15.4

8.5

5.0

7.1

18.9

15.0

10.5

5.1

12.3

7.4

4.6

19.6

24.2

30.4

4.8

4.1

27.1

12.2

13.8

22.6

0.0

4.7

100.4

0.0

1.1

2.5

0.0

12.2

5.8

0.0

0.9

204.5

0.0

1.2

92.1

0.4

77.6

107.1

0.2

7.0

13.6

0.0

5.2

2.5

0.0

0.8

8.4

0.0

25.7

5.0

7.8

1.6

6.9

0.0

1.3

6.1

0.0

Police services

80.6

Law courts and prisons

34.1

Home affairs

4.8

Executive and legislative organs

8.0

Public administration and fiscal affairs

21.7

External affairs

2.8

Payments for financial assets

Debt-service costs

Contingency reserve

Total

650.4

Note: Payments for financial assets are not shown in the table, but are included in the row totals.

18.3 11.7 3.3 4.8 16.4 2.3

279.5

3.8

1.9

0.0

1.7

1.0

0.0

0.6

0.2

0.0

0.3

1.4

0.0

2.0

5.9

0.0

0.5

2.1

0.1

269.7

161.9

590.0

278.3

Total

272.3 119.6 11.0 248.8 229.4 105.9 218.8 36.2 27.4 33.4 93.1 17.4 46.7 104.6 48.5

8.9 14.5 46.1 7.9 48.2 269.7 12.0 2 020.4

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