Ten highlights of the 2022 Budget Speech
Mbongeni Mguni | Monday February 7, 2022 19:55
Deficit declines
According to the figures shared by Serame, the deficit in 2022-2023 is forecast to reach P6.98 billion, a significant reduction from the P10 billion expected for 2021-2022 and the massive P16.4 billion recorded in 2020-2021.
Revenues peak
Revenues for 2022-2023 are projected to reach P67.87 billion, the highest forecast government has made in history, according to available data. According to Serame, nearly all revenue streams are expected to rise in the upcoming financial year except for customs and excise earnings. Mineral revenues are due to reach P24.1 billion, while non-mining taxes are forecast to be P14.3 billion. Value Added Tax is expected to contribute P12 billion to the national coffers
Capital market engagement
Government intends to take measures in the upcoming financial year to improve the functioning of the domestic debt market. This will be to ensure that government can raise funds locally to meet part of its borrowing needs. The action comes as government has struggled to raise budget funds from the local capital market, with nearly all of the monthly auctions of government securities held since September 2020, being under allotted.
Ministerial shake-up
Serame confirmed a recent Mmegi exclusive to the effect that government intends to shake-up its ministries and their mandates, using the RESET agenda as a guide. According to the Minister, proposals for a restructuring of ministries have been approved by Cabinet, for implementation from 1st April 2022. No additional ministries will be created and the funds allocated under the 2022-2023 budget will be reallocated to the new mandates
Parastatal revamp
Cabinet is considering recommendations from a sub-committee on which parastatals to merge, close and divest from. The plan, previously reported on by Mmegi, is part of plans to enhancing greater efficiency among state owned entities and reducing government spending. In addition, the revamp will also provide more space for the private sector to take up the space the parastatals were previously engaged in. Parastatal subventions will also be reduced by P60 million in the upcoming financial year
Council funding cut
Local authorities, particularly those in urban areas, will have to increasingly come up with their own funding, according to Serame’s proposals. The 2022-2023 intends to cut revenue support grants to councils by P170 million, as part of broader spending cuts and fiscal reforms.
Recurrent/development budget split
Serame’s budget speech also tackled the much-debated issue of the split in the budget between recurrent and development spending. Analysts have long urged government to allocate a greater portion of the annual budget to development spending, which in turn not only supports private sector growth, but underpins economic expansion and job creation. For 2022-2023, recurrent spending comprises 78 percent of total spending (minus statutory expenditure), while in 2021-2022 recurrent spending accounted for 81 percent of the total.
A1 expansion
The main A1 highway from Ramatlabama to Ramokgwebana will be progressively reconstructed and converted to dual carriageway. The project will be implemented in phases with the first phase covering road sections that have reached the design life and are currently experiencing failure due to development of potholes. Toll gates may be introduced on sections of the A1 as part of the Public Private Partnership model for road development and maintenance
Social safety nets increased
Serame has proposed increments in the payouts for old age pensions, destitute allowances, world war two veterans’ allowances, and the disabled. Budget allocations for Social Protection programmes that fall under the development budget, such as Ipelegeng, Poverty Eradication, Self Help Housing Scheme, Destitute Housing, Livestock Management and Infrastructure Development and Constituency Community Projects, have been maintained, despite the tight budget.
Health and infrastructure prioritised
The expenditure allocations indicate that focus has been placed on health, particularly the response to COVID-19 and the development of infrastructure, starting with ongoing projects. Serame has said maintenance of existing infrastructure is also a priority, with a proposed total budget of P3 billion for 2022-2023. In the maintenance budget, the bulk of projects will be reserved for citizen-owned companies that are registered with the PPADB. Constituency Community Projects will be reserved for contractors in the immediate locality, in order to provide a focused fiscal stimulus throughout the entire country.