Balancing SA’s finances

Balancing SA’s finances

When Finance Minister Nhlanhla Nene sat down to prepare his maiden Budget announcement,

in his own words, he knew it “would be a challenging Budget to prepare, under difficult economic circumstances”.

A realisation made clear by one of the inputs he received from a Johannesburger, who, mindful of these circumstances,

wrote in response to the Budget tips campaign just to wish Minister Nene well for what he described as “a daunting task”.

No tip followed. The 2015 Budget announcement was indeed a tough balancing act.

 As weakened global economic conditions weighed in on South Africa’s growth and fi nancial health, fiscal consolidation could no longer be ignored.

Though South Africa continues to register positive growth rates, many businesses have struggled to maintain profitability,

the unemployment rate averages 24.3 per cent, according to the 2014 fourth quarter figures, and government is now also forced to adjust to slower revenue growth.

Despite these, coupled with rising debt, the Minister’s Budget speech needed to set the country on a path of growth

by addressing challenges that hinder growth – such as the energy crisis, a lack of work opportunities and limited economic participation.

Prior to walking up the stairs of the National Assembly, the Minister had the task of cutting expenditure over the next two years

and raising revenue from taxes to generate an extra R12 billion to help fund the budget for this year and another R15 billion for next year.

He also needed to narrow the budget deficit to 3.6 per cent.

And despite these constraints, the Minister needed to ensure that this year’s Budget was in-line with the goals of the National Development Plan.

With all this in mind, the Minister delivered the Budget speech saying:

“The 2015 Budget is aimed at rebalancing fiscal policy to give greater impetus to investment,

to support enterprise development, to promote agriculture and industry and to make our cities engines of growth.”

Personal income tax He also announced that from April 2015, taxpayers should expect

to pay a percentage point more from their personal income tax.

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