Budget -2016
We chop off zeros to show how precariously positioned SA’s finances really are.
The trillions, billions and millions of rands littering the various tables and graphs of the Medium Term Budget Policy Statement (MTBPS) make it extremely difficult to understand the true health of the South African economy.
But many South Africans understand the monthly struggle to survive on a budget and to be able to eat during the last few days before payday. So I have chopped off a few zeros (7 to be exact) from the annual budget and reworked the amounts to reflect monthly amounts.
In the table below, the budgets of both SA Inc. and SA Household are shown. On the left is SA Inc., which has the official revised 2016/17 budget as tabled by Pravin Gordhan in the (MTBPS). On the right is the monthly budget of SA Household, which contains the reworked monthly amounts.
I am sure that most South Africans would not be able to fathom what the financial position of SA Inc. is by looking at the official numbers, but I am sure the households who count down the days to payday every month will look at the budget of SA Household and immediately see the red lights flashing.
It is evident that SA Household is in serious financial difficulty and if something is not done soon, the sheriff will be knocking on the door.
SA Inc. | SA Household | |
2017 annual budget | Monthly household budget | |
Revenue | R1 301 000 000 000 | R10 842 |
Expenditure | R1 451 500 000 000 | (R12 095) |
Basic education | R228 400 000 000 | (R1 903) |
Health | R169 300 000 000 | (R1 411) |
Defence | R189 500 000 000 | (R1 579) |
Post school education | R68 600 000 000 | (R572) |
Economic affairs | R207 600 000 000 | (R1 730) |
Human settlements | R181 100 000 000 | (R1 509) |
Agriculture | R26 300 000 000 | (R219) |
General public services | R67 800 000 000 | (R565) |
Social protection | R165 100 000 000 | (R1 376) |
Interest payments | R147 700 000 000 | (R1 231) |
Deficit | R (150 500 000 000) | (R1 253) |
Total debt | R2 004 400 000 000 | R200 440 |
From the analysis, it can be seen that SA Household’s monthly income, or revenue, is R10 842. The expenses amount to R12 095. This means there is a shortfall of R1 253 every month. and the only way SA Household can survive, is to borrow money.
This is a typical South African scenario and it means that for SA Household to be able to put food on the table, it must borrow money to fund the shortfall.
But SA Household is already in debt, to the tune of R200 440 – a large amount if the household’s total monthly income is only R10 842, and since SA Household sees a shortfall every month, this amount of debt just continues to rise. The monthly interest repayments total R1 231 and represent more than 11% of the total income and are almost as big an expense as health payments. The interest payments also do not include any capital amounts, which means that the total amount of debt is only going one way!
Source: Moneyweb – Ryk van Niekerk
Remember to set up or log in to your personal Money 101 Budget planner
