Spending by the South African government is expected to total R5.9 trillion over the three-year period, growing at an annual average of 7. 8 percent per year.
The Medium Term Budget Policy Statement (MTBPS) presented in Parliament on Wednesday by Finance Minister Tito Mboweni outlines that government funding remains focused on ensuring access to health and education, supporting low-income households through social grants, and providing basic services such as water and electricity.
But the expenditure ceiling remains unchanged from the 2018 budget.
“Of the R32.4 billion of expenditure reprioritised over the medium term, R15.9 billion goes towards faster-spending infrastructure programmes, clothing, and textile incentives, and job creation under the Expanded Public Works Programme,” the statement reads
National Treasury said the reprioritisation takes into account President Cyril Ramaphosa’s economic stimulus and recovery plan announced in September.
“The public service wage bill constitutes the largest share of government expenditure by economic classification, crowding out other spending. The wage agreement reached in 2018 adds to these pressures.”
Treasury said national and provincial governments will work with municipalities to improve governance and confront weaknesses in financial management.
Government spending is anticipated to grow by an average 7.8 percent per year, reaching R2.1 trillion in 2021/22.
“Despite moderate economic growth projections, spending growth will outpace inflation, with real non-interest expenditure growth expected to average 1.9 percent over the period,” it said.
To support job creation, National Treasury said funds are being reprioritised to programmes designed to boost growth in the township and rural economies and to repair roads infrastructure.
“Also in line with the president’s announcement, funds are allocated to fill critical vacancies in public health. Over the medium-term expenditure framework period, the government will intensify efforts to improve spending efficiency, increase capacity and improve governance,” it said.
“Over the next 12 months, the National Treasury will develop a framework to address governance and financial performance in national departments that are in distress, as prescribed by the Public Finance Management Act (1999) and the Constitution.”
Government’s three-year spending plans aim to reduce poverty and inequality and to increase employment and inclusive growth. These priorities are set out in the National Development Plan (NDP) and the medium-term strategic framework, which guide resource allocation.