Minister of Finance, Mr Godongwana Delivers Mid Term Budget Policy Statement for 2021

Enoch Godongwana

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On 11 November 2021, the Minister of Finance, Mr. Enoch Godongwana has delivered the Medium Term Budget Policy Statement.


Below are the Budget Highlights:

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 Programme

  • 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

In case you have missed the speech, watch the video below:

To read the Minister’s speech, click here.

Source: National Treasury.

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