All eyes will firmly be on Finance Minister Pravin Gordhan on Wednesday when he delivers his budget, which is expected to signal a move away from the continuous expansion of the welfare bill to boosting economic growth and job creation.
Economists believe government has finally realised that it can no longer afford to increase the army of social-grant recipients given that state finances are yet to recover from sluggish economic growth.
Sanlam chief economist Jac Laubscher said the country’s social-grant system would probably reach its limit when government extends the child-support grant to the age of 18.
About 15 million South Africans are already receiving social grants to the value of 3.5% of gross domestic product (GDP) yearly.
Economists predict that government will struggle to reach its revenue collection target of R761 billion for the current fiscal year, which ends in March.
In the coming fiscal year, which begins in April, the state hopes to collect R843 billion from taxpayers, while it expects to spend R977.2 billion, leaving a shortfall of R134.2 billion.
If government fails to meet its revenue targets for the next two years, it will potentially run budget deficits that are larger than what was projected in the mini-budget.
Gordhan is expected to announce a budget that maintains multibillion-rand infrastructure spending and will outline how government plans to use the fiscal policy to create jobs.
As is the norm, there will be huge allocations for health and education, in line with attempts to improve the quality of the country’s workforce.
But cash-strapped taxpayers should not expect Gordhan to provide much-needed tax relief.