Key points of Gordhan's 2016 medium term budget

Key points of Gordhan's 2016 medium term budget

Finance Minister Pravin Gordhan has tabled his 2016 Medium Term Budget Policy Statement (MTBPS) in Parliament and it's all about measured fiscal consolidation.

Pravin Gordhan

Gordhan emphasised the role of government to provide for South Africans and this is challenged by slow economic growth.


He acknowledges that slow economic growth is hampering employment which places pressure on households and businesses.


"In the lead-up to this year's Medium Term Budget Policy Statement, we have been acutely aware of the depth of these stresses, and the diverse interests and expectations of South Africans," Gorhan said.


Here are the key points from this year's MTBPS:


- Budget exceeds R1 trillion per year, but quality of public expenditure needs to be improved

- Our economic growth will be just 0.5 percent this year, rising to 1.7 per cent in 2017

- Measured and balanced fiscal consolidation will continue over the period ahead, with the budget deficit declining from 3.4 per cent this year to 2.5 per cent in 2019/20

- Debt is projected to stabilise at just less than 48 per cent of GDP

- There is a proposal to raise R43 billion through tax measures over the next two years

- The expenditure ceiling will be lowered by R26 billion

- Infrastructure investment, mainly in energy, transport and telecommunications, will amount to over R900 billion over the next three years

- There is an additional increase of R10 a month to social grants with effect from October

- In the current year, Treasury projects R23 billion less revenue than the February estimate

- The carbon tax bill will be dealt with in 2017. Consultations on the proposed sugar tax are continuing

- Conditions have been imposed on recent merger transactions that will open up retail space in spaza shops to smaller producers

- Construction of the Meerkat array is due for completion at the end of 2017

- Some R17 billion worth of investment and 5 000 jobs have been unlocked in the oceans economy

- Costs of financial services will be reduced and made transparent

- The restructuring of African Bank is complete. It was facilitated by a government-guaranteed loan issued by the Reserve Bank, which has been fully repaid, with interest

- In addition to the R16 billion added to higher education funding in the February budget, a further R9 billion for the National Student Financial Aid Scheme over the period ahead is proposed, raising its funding by over 18 percent a year

- Over R8 billion is proposed to meet the costs of fee increases for students from households with incomes up to R600 000

- Once Eskom has signed the offtake nuclear agreements, a further R58 billion in investment and some 4 800 construction jobs will commence, bringing 2 354 MW of capacity to the electricity grid

- Contracts are being renegotiated with airlines, hotel groups, software suppliers, pharmaceutical companies, property owners and construction firms. This aims to achieve savings of R25 billion a year by 2018/19

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