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RAF earmarked as one of the risks that could further widen budget deficit

Treasury said that over the past 20 years, increases of the RAF levy had typically exceeded inflation yet the liabilities of the fund had grown at a faster pace.

Road Accident Fund logo. Picture: Supplied.

JOHANNESBURG - While Finance Minister Tito Mboweni has attempted to cut the fat in his budget for this year, the Road Accident Fund (RAF) has been listed as one of the risks that could further widen the budget deficit.

Mboweni tabled a R1.93 billion budget for the 2020/2021 financial year.

But government is struggling with a consolidated deficit of R6.8% of gross domestic profit and Mboweni has proposed total reductions of R261 billion.

The RAF is the second-largest contingent liability for government after Eskom.

The fund, which provides compensation to victims of road accidents, has had claims of about R94.6 billion and that figure is expected to increase to R145.6 billion in 2022/2023.

On Wednesday, Mboweni made an announcement on the RAF levy: “To adjust for inflation, the fuel levy goes up by 25 cents per litre, of which 16 cents is for the general fuel levy and 9 cents is for the Road Accident Fund levy.”

Treasury said that over the past 20 years, increases of the RAF levy had typically exceeded inflation yet the liabilities of the fund had grown at a faster pace.

The RAF’s revenue was insufficient to meet its liabilities and as a result its deficit was expected to rise to R593 billion next year.

WATCH: All the ups and down of the Budget Speech 2020

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