Dummies guide to grasping the budget
FINANCE Minister Pravin Gordhan’s medium term budget policy statement (MTBPS), also referred to as the “mini-budget”, is expected to continue the policy of fiscal prudence and responsible government spending.
The mini-budget was initiated nearly 20 years ago to ensure transparency and co-operative governance. Gordhan will table the budget today, outlining the government’s fiscal framework and expenditure plans.
By setting out policy considerations, it helps to promote public discussion of the spending proposals.
The mini-budget includes the proposed division of revenue between national, provincial and local government.
Provinces, in particular, benefit from a clear statement of the proposed division of revenue in advance of the new financial year.
This helps them to plan their spending and to table their budgets shortly after national Budget Day.
The mini-budget also highlights key government priorities; the size of the spending envelope for the next medium term expenditure framework (MTEF) period; new macroeconomic projections for the next three years; and projections for tax revenues, deficit and the total affordable level of spending.
It will describe the government’s goals and objectives, explain the economic environment within which those objectives are being addressed, and the total level of resources that will be available.
The first mini-budget was in 1997. The reasons cited for this were:
Openness and transparency – so that all stakeholders should have an opportunity to participate in the budget-making process, on an informed basis;
Realistic policy debate – so that proposals and debate should be based on a realistic understanding of what can be afforded and delivered, and not wish lists; and
Certainty – the policy statement sets the boundaries of the budget debate, and so enhances the certainty of the public service and the markets.
Allocations to national government departments are finalised and proposed to the cabinet in midNovember.
Once the cabinet approves it, allocation letters are then sent out to the departments.
Parliament’s standing committees, with the National Treasury and the Department of Performance Monitoring and Evaluation, analyse departmental reports on performance indicators that measure progress made on their mandates for which they are given their share of the budget.
This monitoring quarterly basis.
With a court appearance in November for alleged fraud hanging over his head, a student uprising, an unstable rand, high unemployment, a sluggish economy and a ratings downgrade threat, Gordhan is expected to continue to adopt a hawkish approach given South Africa’s socio-political instability.
Gordhan will be presenting this while he faces charges of fraud, and at a time when rating agencies are keeping an eye on the country.
The agencies will be in South Africa next month to conduct another review before announcing the results in December.
The National Treasury holds departments accountable in relation to budget allocations by assessing value for money as well as spending patterns on policy priorities.
The Department of Performance Monitoring and Evaluation holds departments accountable in relation to outputs, as included in delivery agreements signed between the president and the relevant national minister. is done on a