BUDGET 2021 - National Treasury

1 BUDGET 2021 BUDGET REVIEW BUDGET Review 2021 National Treasury Republic of South Africa 24 February 2021 ii ISBN: 978-0-621-49079-4 RP: 06/2021 The BUDGET Review is compiled using the latest available information from departmental and other sources. Some of this information is unaudited or subject to revision. To obtain additional copies of this document, please contact: Communications Directorate National Treasury Private Bag X115 Pretoria 0001 South Africa Tel: +27 12 315 5944 Fax: +27 12 407 9055 The document is also available on the internet at: RSABUDGET2021 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.

2 Gross debt has increased from per cent to per cent of GDP for the year 2020/21. The 2021 BUDGET proposes measures to narrow the main BUDGET primary deficit from per cent of GDP in the current year to per cent in 2023/24. The proposed fiscal framework will stabilise debt at 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 per cent of gross tax OUTLOOK Government will support the economic recovery by extending short-term economic support and undertaking reforms to lower the cost of doing business and stabilise the public finances.

3 Real GDP is expected to grow at per cent in 2021 and per cent in 2022. The global economic outlook is uncertain; however, additional policy stimulus packages and successful rollout of COVID-19 vaccines will boost global growth. A successful rollout of COVID-19 vaccines will support the economic recovery and global trade. Government will take steps to promote faster growth by stabilising electricity supply, supporting industries with high employment. potential and undertaking partnerships with the private sector. Operation Vulindlela is supporting the implementation of key structural reforms, but faster progress is needed to generate an economic PROGRAMMES Total consolidated spending amounts to R2 trillion each year over the medium term.

4 The bulk of the spending is allocated to learning and culture ( billion), social development ( billion) and health ( 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 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.

5 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 per month from 1 March set of 2021 BUDGET data can be found in the statistical tables at the back of the BUDGET Review. The data on this page may differ from the statistical annexure due to classification, definition and PERFORMANCE AND PROJECTIONSP ercentage change2017201820192020202120222023 ActualEstimateForecastHousehold fixed-capital GDP account balance (% of GDP) CONSOLIDATED FISCAL FRAMEWORKR billion/percentage of GDP2017/182018/192019/202020/212021/2220 22/232023/24 OutcomeEstimateMedium-term estimatesRevenue1 balance domestic product4 OF NATIONALLY RAISED REVENUER billion/percentage of GDP2017/182018/192019/202020/212021/2220 22/232023/24 OutcomeEstimateMedium-term estimatesDIVISION OF AVAILABLE FUNDSN ational departments Provinces Local government Non-interest allocation 1 1 1 1 1 1 1 PERCENTAGE SHARESN ational REVENUE.

6 2021/22R billionTAX REVENUE1 which: Personal income Corporate income Value-added Taxes on international trade and : SACU BUDGET revenue1 , social security funds and public BUDGET revenue1 percentage of GDP Tax Main BUDGET SPENDING BY FUNCTIONAL AND ECONOMIC CLASSIFICATION, 2021/22R billionCompensation of employeesGoods and servicesCapital spending and transfersCurrent transfers and subsidiesInterest paymentsTotalBasic education education and training , culture, sport and recreation protection security funds development and exports and rural development creation and labour affairs regulation and infrastructure , science and technology and state security services courts and prisons affairs and legislative organs administration and fiscal affairs affairs for financial assets costs reserve 2.

7 Payments for financial assets are not shown in the table, but are included in the row BUDGET RSA BUDGET #RSAB udget2021 BUDGET2021/22 Tel: (012) 315 BYBUDGET EXPENDITURECONSOLIDATED GOVERNMENT bnAgriculture and rural bnInnovation, science and bnEconomic regulation and bnIndustrialisation and bnJob creation and labour bnECONOMIC development bnHome bnPolice bnDefence and state bnLaw courts and bnPEACE AND bnPublic administration and fiscal bnExecutive and legislative bnExternal bnGENERAL PUBLIC bn DEBT-SERVICE bn CONTINGENCY RESERVESOCIAL bnSkills development levy bnEducation bnTechnical & vocational education and bnBasic bnUniversity bnNational Student Financial Aid AND CULTURE bnProvincial hospital bnFacilities management and bnDistrict health bnOther health bnCentral

8 Hospital bnOther human settlements and municipal bnMunicipal equitable share bnHuman settlements, water and electrification bnPublic bnCOMMUNITY bnOther bnProvincial social bnPolicy oversight and grant bnChild-support bnSOCIAL bnOld-age bnSocial security fundsvi vii Foreword All budgets are about balance weighing the needs of the present and the future, assessing competing priorities for National development and, of course, managing revenue and expenditure. This year we face an exceptionally difficult balancing act. On one side is a raging pandemic that has led to the most severe global economic contraction in nearly a century.

9 At the time of writing, COVID-19 has claimed the lives of million people, including about 50 000 South Africans. On the other side is a weak economy, with massive unemployment, that is burdened by ailing state-owned companies, the highest BUDGET deficit in our history and rapidly growing public debt. On this razor s edge, the 2021 BUDGET Review looks straight ahead. The 2020 Medium Term BUDGET Policy Statement set a course for economic recovery and fiscal consolidation. The 2021 BUDGET shows some progress: we are doing what we set out to do. The BUDGET funds a massive and free COVID-19 vaccination campaign.

10 It adds R11 billion to the spending framework in 2021/22 for the public employment initiative. It exercises continued restraint in spending growth while ensuring that over the medium term nearly R3 trillion, or per cent of public money, is allocated to learning and culture, health, and social development . It improves the composition of spending by shifting expenditure growth to investment rather than consumption. Finally, it avoids increasing the tax burden by withdrawing R40 billion in previously announced tax increases. Government s fiscal strategy puts South Africa on course to achieve a sufficiently large primary surplus to stabilise debt.