Key takeaways from National Treasury’s press conference

  • National Treasury remained adamant that new spending, which consists of R36.3bn for the fiscal support package and ~R18bn for the public sector wage bill, need to be catered for in the current fiscal framework. 
  • The social spending measures are deemed to be temporary and expire at the end of March 2022. The increase in the public sector wage bill consists of a cash bonus that is non-pensionable, intending to contain the base from which the wage bill grows in F22/23 (factoring in a pay progression increase of 1.5%).  The implication is that fiscal risks associated with the ability of the government to contain spending have shifted to F22/23.  
  • The package of support measures amounts to R38.9bn. Of this, R2.7bn consists of the reprioritisation of spending. An expected overrun in revenues receipts will utilised to finance the balance of R36.3bn.  
  • The Commissioner of SARS confirmed that revenue receipts from corporate taxes would exceed the F21/22 budget target. We estimate excess revenues can reach ~R60bn, predominantly from the mining sector.
  • Fiscal support package:
  • The relevant departments are still discussing the reintroduction of the social distress of relief grant of R350. An amount of R26.7bn has been set aside. 

    Financial support for uninsured small businesses will be managed by the Department of Small Business Development (through Seifa) and the Department of Trade, Industry and Competition. An amount of R2.3bn has been set aside to cover informal businesses, of which R1.3bn consists of new spending and R2.3bn the reprioritisation of current budgets. The damage assessment has not yet been concluded and the MTBPS will reveal additional requirements. However, the DG of Expenditure is confident that this will suffice. The funding mechanism is under discussion.

    The Departments of Policy and Defense will receive additional allocations of R300m and R700m, respectively.

    Sasria will be backed up by R3.9bn. 

    Workers will be allowed to access a certain percentage of retirement funds for a limited period.