Gigaba: Putting together Budget a tough task
Finance Minister Malusi Gigaba unveiled a R1.67 trillion budget on Wednesday, admitting it was tough and that South African’s need to steel themselves.
CAPE TOWN – Finance Minister Malusi Gigaba unveiled a R1.67 trillion budget on Wednesday, admitting it was tough and that South African’s need to steel themselves.
The pain starts with an increase in value added tax from 14 to 15%.
Basic Education has been allocated almost R800 billion, R668 billion will be spent on Health, while R528 billion will go social grants.
On some of the state’s ambitious projects, it's allocated more than R4 billion to get its National Health Insurance (NHI) off the ground.
But it will come at a cost to those with private medical aid.
Gigaba says below inflation increases in medical tax credits will be used to fund the National Health Insurance.
The minister also announced that over R50 billion will be ploughed into Higher Education.
“The largest reallocation of resources towards government’s priorities was on Higher Education, amounting to additional funding of R57 billion over the medium-term.”
But after years of sluggish growth, Gigaba says there is some good news on this front.
“The 2017 GDP growth projection has been revised upward to 1%, which is higher than the 0.7% expected at the time of MTBPS last year.”
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Economists say that yesterday's budget speech must have been a difficult one to deliver with elections less than 18 months away.
But they're optimistic that it should prove fruitful.
Chief economist at Stanlib Kevin Lings: "I think it was a necessary set of measures in order to improve this economy longer term. I'm hoping that this is followed by more positive initiatives to lift South Africa's growth and encourage more investment."
Old Mutual chief investment strategist Dave Mohr says that none of the increases are extremely excessive: "If you look at a lot of the other increases, yes they are there, but they have been regular features. Relative to a year ago, you also had those features and none of them are really excessive. I think if you think of 52c a litre for the petrol price, apparently there is some over recovery for petrol."
Samwu's Papikie Mohale, though, says its not pro-poor: "What disappoints us is the increase in VAT. This will see the poorest of the poor will fork out more for the necessities that they need."
Additional reporting by Katleho Sekhoto.