Mid-Term Budget Speech: “The long Walk is not over …”

Earlier today, a visibly tired Pravin Gordhan delivered what is now known as the most important “Medium Term Budget Speech(Download full Speech)”:https://www.into-sa.comhttps://www.into-sa.com/uploads/download/file/529/Medoum_Term_Budget_Speech__2016_.pdf ever given in South Africa by opening with the conclusion that the government’s objective is to achieve inclusive economic growth in South Africa. During his Medium-Term Budget Policy Statement, Gordhan told the public that the ailing economy can be restored if all sectors collaborate and if government does not collect and generate revenue for the economy, there will be hit on both taxes and expenditure.

He says that it will take collective responsibility to support confidence and investment in our economy, while also creating a predictable policy and political environment: “What we seek to achieve, and more, can be done if we collectively make the right choices… and put the national interest first!”

The key points of the speech in short:

* economy expected to grow by 0.5% for 2016, down from the 0.9% estimated in February.
* budget deficit will decline from the current 3.4% to 2.5% in 2020.
* proposes raising an additional R43 billion rand through tax measures over the next two years, R28 billion of which will be in the coming financial year.
* government predict there will be R23 billion less revenue than what was initially was forecast in the 2016 Budget Speech in February.
* expenditure ceiling will be lowered by R26 billion.
* consolidated government expenditure will rise by 7.6%
* additional increase of R10 a month has been made to social grants with effect from October.
* additional allocations for tertiary education, healthcare services and social protection, and
* proposes a further R 9 billion for the National Student Financial Aid Scheme (NSFAS) over the period ahead (an additional 18% a year).

The clear winners are the students and the tertiary educational system, but their victory is also the sad consolidation of the “entitled society”, where others are paying the price for goods and services that are demanded by a majority of non-taxpayers!

Desperate times call for desperate measures, this conservative budget has “survival mode” written all over it and is hopefully – for now – enough to prevent international credit rating agencies from turning the shares in the South African economy into shards of junk!

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