Finance Minister Pravin Gordhan delivered his Medium-Term Budget Policy Statement (MTBPS) to Parliament on Wednesday, 26th October 2016.

Unlike South Africa’s annual budget, this is usually a relatively low-key event, but this year, set against a backdrop of political and economic uncertainty, the MTBPS attracted widespread interest.

Emphasizing the need for government, business and all South Africans to work together to overcome this country’s problems, Gordhan quoted a Pedi saying:   “Lions that fail to work as a team will struggle to bring down even a limping buffalo”.

Here is a summary of some of the key points from the MTBPS:

  • South Africa’s economic growth estimate for 2016 has been revised downwards to 0.5 % from 0.9 %.
  • National Treasury forecasts a moderate recovery over the next three years, with GDP growth reaching 2.2 % in 2019.
  • The inflation forecast has been revised down to 6.4 % for 2016. Inflation is expected to remain around 6 % annually over the medium term, with upward pressure from electricity prices.
  • Government has budgeted R987.4 billion for infrastructure over the next three years, with large investments continuing in energy, transport and telecommunications.
  • Investment by general government is expected to average 4.8 per cent growth over the medium term, with investment by public corporations reaching 2.3 per cent growth in 2019.
  • Government predicts that there will be R23 billion less revenue than what was initially was forecast in the 2016 Budget Speech in February.
  • It is proposed that an additional R43 billion Rand will be raised through tax measures over the next two years, R28 billion of this will be raised in the coming financial year.
  • The expenditure ceiling will be lowered by R26 billion.
  • Consolidated government expenditure will rise by 7.6%
  • Additional allocations for tertiary education, healthcare services and social protection have been proposed.

A further R 9 billion for the National Student Financial Aid Scheme (NSFAS) over the period ahead (an additional 18% a year) has been proposed.