South African budget increases social grants ahead of May elections

by MMC
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  • By Kyle Zeeman
  • BBC News, Johannesburg


Finance Minister Enoch Godongwana has admitted that the economy is not growing fast enough.

South Africa’s finance minister increased welfare benefits for more than 18 million people in his latest budget ahead of May’s general election.

The ruling African National Congress (ANC) faces a daunting political challenge as it struggles to retain its absolute majority in elections on May 29.

Their left-wing rival, the Economic Freedom Fighters (EFF), has already pledged to double payments to the poor.

But difficult economic conditions leave the government little room for maneuver.

Finance Minister Enoch Godongwana was under pressure to reduce the government’s growing budget deficit while keeping spending and taxes low, so as not to discourage voters.

The ANC won the 2019 elections with 57% of the national vote. Opinion polls suggest that for the first time since coming to power at the end of apartheid in 1994, the party’s vote share could fall below 50% in the next election.

To cheers from ANC MPs, Mr Godongwana said monthly payments to the elderly, veterans and people with disabilities, among others, would increase by 100 rand ($5.32; £4.22) per month. month – an increase in line with inflation of almost 5%. .

The minister also announced an increase in grants to others, including those with children.

There has been speculation, in line with what President Cyril Ramaphosa said earlier this month, that the government would increase monthly payments to low incomes and those most in need.

This Social Relief in Distress Grant (SRD Grant) of R350 is currently being paid to nine million people.

The biggest beneficiaries include those who are unemployed, in a country where just under a third of the potential workforce is unable to find work and youth unemployment stands at 4.7 million.

Mr Godongwana said efforts were underway to “improve” their SRD grant. He did not disclose the amount, saying more revenue needed to be found first.

The EFF, which is eating into the ANC’s support, promised in its election manifesto to double all permanent social grants.

He also promised a whole new payment to all unemployed high school and college graduates.

One of the EFF MPs, popular musician Ringo Madlingozi, suggested the minister was avoiding accountability in his speech and urged the party’s supporters to vote against the ANC.

Meanwhile, the main opposition Democratic Alliance (DA) said it would increase payments, particularly for those with children.

He also wants to transform the SRD allowance into an allowance for jobseekers. He criticized the budget for doing nothing for vulnerable South Africans.

While Mr Godongwana seeks to increase government revenue, he has not increased income tax levels, even though more people will pay taxes as their salaries rise.

He also did not increase the general fuel tax on motorists, but an increase in the carbon tax would lead to higher gasoline prices.

The finance minister also increased taxes on cigarettes, e-cigarettes, cigars and alcohol.

Overall, South Africa faces slow economic growth. Mr. Godongwana admitted that “the size of the pie is not growing fast enough to meet our development needs.”

It does not create enough jobs for the 7.9 million unemployed. People also face rising costs of living and constant power outages, affecting homes and businesses.

The ANC will now have to convince enough voters that it can still be counted on to manage the economy in the interests of South Africans.

While opposition parties described the budget as an election campaign speech for the ANC, Mr Godongwana denied this.

He told local broadcaster eNCA that his budget was aimed at fixing the country’s balance sheet and would have no impact on the elections.

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