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South Africa: National Budget 2011/2012

Kevin Lings Economist 23 February 2010. South Africa: National Budget 2011/2012. SA GDP growth (government estimate). %. Fixed Investment Growth (government estimate). %. Current account (government estimate). % of GDP. Inflation (CPI) (government estimate). %. CPI forecast.

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South Africa: National Budget 2011/2012

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  1. Kevin Lings Economist 23 February 2010 South Africa:National Budget 2011/2012

  2. SA GDP growth (government estimate) %

  3. Fixed Investment Growth (government estimate) %

  4. Current account (government estimate) % of GDP

  5. Inflation (CPI) (government estimate) % CPI forecast

  6. Open Budget Index 2010 Index out of 100

  7. SA government’s budget 2011/2012 – main indicators. Consolidated budget

  8. Government expenditure & revenue as % of GDP % Fiscal years Huge increase in expenditure Expenditure as % of GDP Revenue as % of GDP

  9. SA budget deficit as % of GDP % Fiscal years, main budget

  10. SA budget deficit as % of GDP (consolidated budget) % Fiscal years

  11. Fiscal balance as % of GDP - 2011 %

  12. Breakdown of tax revenue (20011/12)

  13. Government budget revenue overruns Rbn

  14. SA budget revenue overrun in 2010/2011: R16.6bn Rbn

  15. IDC Employment fund Job summit Tax incentives

  16. Budget revenue increases 2011/2012

  17. Personal tax relief in previous tax years • Tax relief for individuals: • 1998/1999 R4.0bn • 1999/2000 R5.0bn • 2000/2001 R10.0bn • 2001/2002 R8.0bn • 2002/2003 R15.0bn • 2003/2004 R13.0bn • 2004/2005 R4.0bn • 2005/2006 R6.8bn • 2006/2007 R13.5bn • 2007/2008 R8.4bn • 2008/2009 R7.2bn • 2009/2010 R13.0bn • 2010/2011 R6.5bn • 2011/2012 R8.1bn

  18. Tax reduction for individuals <65 Taxable income (rands). Tax relief of R8.1 billion in 2011/2012

  19. Breakdown of Fuel Levy – R2.61 per litre

  20. Other tax issues: • New tax bracket/threshold for people aged 75 years and older • New tax on gambling (15% on winnings over R15 000) • Threshold for interest income raised only fractionally (R22 300 to R22 800 for under 65, and R32 000 to R33 000 for 65 and over) • International air passenger departure tax increased (R150 to R190 per passenger) • Discussion on a possible carbon tax

  21. Customs union payments by SA Government Rbn

  22. IDC Employment fund Job summit Tax incentives

  23. Breakdown of expenditure (including interest)

  24. Budget Expenditure increases in 2011/12 % • Consolidated national and provincial expenditure

  25. Key expenditure items % of total 1990/91 05/06 07/08 06/07 08/09 09/10 10/11 10/12 4.0 9.6 19.6 11.6 15.6 15.8 4.1 9.9 20.5 12.0 15.7 13.5 4.1 9.8 20.7 12.2 16.0 11.6 5.7 10.9 18.6 11.2 16.6 11.2 4.4 9.9 20.0 11.0 15.8 14.2 Defence Police, courts, prisons Education Health Social security Economic services 13.7 5.6 20.9 10.1 10.8 5.1 10.0 18.2 11.4 15.2 13.5 4.9 10.2 19.6 11.0 16.3 12.9

  26. Social grant beneficiary numbers • Number of people obtaining a social grant • April 2000 2 946 618 • April 2003 5 808 494 • April 2004 7 941 562 • April 2005 9 406 829 • April 2006 10 918 263 • April 2007 11 983 141 • April 2008 12 374 770 • April 2009 13 066 118 • April 2010 13 958 894 • April 2011 14 892 000 • April 2012 15 713 000 • April 2013 16 223 000 • April 2014 16 709 000

  27. Government salary payments: up 61.5% in past 3 years Billions Budgeted to rise by only 7.9% in 2011/12? Grown by an average 17.3% p.a. for past 3 year

  28. South Africa’s employment problem Millions Create 5 million jobs in 10 years

  29. IDC Employment fund Job summit Tax incentives

  30. Fiscal measures to improve employment: • Youth employment subsidy: R5 billion over 3 years. Tax credit administered by SARS. Expected to create 178 000 new jobs • Learnership tax incentive extended for 5 years, but will be reviewed (was due to expire in Sep 2011. Have not been widely used) • Training layoff scheme has utilised R21.3 million in training allowances and supported 7 286 workers • Expanded public works programme budgeted at R73 billion over next 3 years • Jobs fund: R9 billion. Available to both private and public sector. Expected to employ 50 000 to 100 000 over the ‘medium term’

  31. Public sector infrastructural spending Rbn R808.6bn

  32. IDC Employment fund Job summit Tax incentives

  33. Financing the National Budget 2011/12 2010/2011 Outcome Budget National deficit/surplus Extraordinary receipts Extraordinary payments Net borrowing requirement Domestic short-term loans Domestic long-term loans (net) Foreign loans (net) Change in cash balance Total financing -143.36 3.15 -0.80 -141.01 35.10 139.15 -2.27 -30.97 141.01 -159.07 1.35 -0.15 -157.87 22.00 135.37 5.00 -4.50 157.87

  34. Government net domestic long-term bonds issued Rbn Fiscal years

  35. Government net foreign funding Rbn Fiscal years

  36. Public sector borrowing requirement Rbn Fiscal years

  37. Government domestic debt as % of GDP %

  38. Government total loan debt as % of GDP %

  39. Debt servicing as % of total spending % Fiscal years

  40. Evaluate the budget Aims Positive Negative Budget should be guide to govt's intentions Budget deficit contained Spending - efficiency Revenue - no ad hoc measures - efficiency of collection Positive impact on the economy - Growth - Inflation Exchange control relaxation Encouraging private sector investment Unemployment and Job creation Law & Order, Crime and Violence Poverty relief Encourage savings Encourage small business Innovation Yes Yes No Yes Yes Yes No No Yes Yes No Yes No Yes? No

  41. IDC Employment fund Job summit Tax incentives

  42. Thank You

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