As widely expected, the new coronavirus infection (Covid-19) social relief for suffering The subsidy is due to be extended for a further year until March 2025, but National Treasury has dropped strong hints that additional taxes may be needed to fund future SRD subsidies.
The 2019 Medium-Term Budget Policy Statement (MTBPS) states that by 2040/41, recipients of temporary non-COVID-19 social assistance will–19 Social Distress Relief Grant – Projected to increase to R22.5 million, requiring spending on social grants equivalent to 3% of GDP annually. This is consistent with current subsidy expenditures excluding temporary subsidies.
The Social Distress Relief Grant was introduced to help people on low incomes.–Individuals whose income has been affected by the COVID-19 lockdown–Due to the 2019 pandemic, it was only scheduled to last for one year. However, with elections looming in 2024, the grants have been extended year after year despite a clear lack of funding mechanisms.
Earlier this year, Mr Sassa told parliament that around 7.5 million people were already receiving the Social Distress Relief Grant, with another 13 million applying in January this year. At least 60% of recipients are between the ages of 18 and 35, and at least 45% of them have a grade 12 certificate.
Addressing the elephant in the room, MTBPS said that if the new subsidy (Social Distress Relief Grant) or similar type is made permanent, beneficiaries will increase from 27.3 million in 2023/24 to 2040/41. It warned that the number is expected to rise to 40.4 million in 2020. . Social grant spending is therefore expected to reach 3.8% of GDP in 2040/41, requiring “corresponding permanent sources of funding, including additional revenue measures”.
Budget 2023 reiterates that any extension or replacement of subsidies will need to be funded through new sources or reprioritization of other spending items.Since then, financial Space is significantly reduced, and there is less room for expansion without additional funding.
A pensioner holds his Sassa card during subsidy collection in March 2017. (Photo: Gallo Images / Sowetan / Sandile Ndlovu)
R34 billion allocated.
Finance Minister Enoch Godongwana said R34 billion has been allocated to extend the COVID-19 Social Distress Relief Grant for another year.
“The government proposes to secure funding for subsidies for 2024/25 in the fiscal framework. Beyond this, there needs to be a comprehensive review of the entire social grants system by the Ministry of Social Development and the National Treasury. ” said MTBPS.
Speaking to the media ahead of his speech, the minister said people should not think that the extension of the SRDG meant it would end in March 2025. “We need a comprehensive review that takes into account social assistance, social insurance and an active labor market,” he said.
In the medium term of 2024, South Africa will already spend around 61% of consolidated non-interest expenditure on social wages (including public spending on health, education, housing, social protection, transport, employment and community amenities). (combined).
Of this, R945.9 billion will be spent on social protection transfers such as the old age grant, child benefit grant, disability grant and COVID-19 relief.–19 Social Distress Relief Grant. South Africa's social protection spending program, measured as a percentage of GDP, is one of the largest in the developing world. DM
Please read Finance Minister Enoch Godongwana's medium-term budget policy statement below.
