Wednesday, January 19

The general government will invest 500 billion rand in infrastructure over the next three years

An estimated R500 billion will be invested in general government infrastructure over the next three years, according to the Medium Term Budget Policy Statement (MTBPS).

However, the 2021 public service wage bill will divert funds from the Infrastructure Fund.

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The MTBPS said that the 2021 salary agreement provides for a pensionable increase of 1.5%, as provided in the 2021 Budget, but also a one-time non-pensionable cash tip of R1,000 after tax per person per month, which does not it was budgeted. .

“This bonus is expected to cost the government R20.5 billion in the current year, with a preliminary carry-over of R20.5 billion in 2022/23 if no new agreement is reached.

“In 2021/22, the bonus will be largely financed by additional income and will require the transfer of funds from the Infrastructure Fund, with an interim allocation of R20.5 billion for 2022/23 included in the fiscal framework,” he said.

A total of R2.3 billion has been allocated in the MTBPS to help businesses rebuild after the third wave of the Covid-19 pandemic and the destruction of infrastructure in Gauteng and KwaZulu-Natal.

Of this amount, the Departments of Commerce, Industry and Competition assign new priorities to 700 million rand and the Department of Small Business Development to 300 million rand.

Finance Minister Enoch Godongwana said Thursday that the Economic Recovery and Reconstruction Plan identifies infrastructure development as a critical component in turning the country’s fortunes around.

Gondongwana referred to the 65 priority infrastructure projects valued at R340 billion that were published last year and the 55 additional new projects from various sectors valued at R441 billion that were recently unveiled.

He stressed that the government will need partnerships with the private sector to fill this funding gap.

Gondongwana said the Infrastructure Fund is an important intervention towards the government’s strategic goal of ensuring that total investment in public infrastructure is almost 30% of gross fixed capital formation by 2030, as envisaged by the National Development Plan. .

The MTBPS said that gross fixed capital formation has improved marginally in the current year.

but remains well below pre-pandemic levels, adding that investment in the second quarter of

2021 represented approximately 14% of GDP, compared to

the goal of the National Development Plan of 30%, after a decrease of 13 years since 2008.

He said private investment, the largest component of fixed capital formation, has been slow to recover from 2020 lows.

This was attributed to weak confidence and demand, and the persistence

Limitations, such as an inadequate power supply.

Government investment has continued to fall, he added.

Godongwana emphasized that the government will maintain its commitment to the Infrastructure Fund, including the allocation of R100 billion for a decade from 2019/20, as communicated in the previous budget.

The Medium Term Budget Policy Statement (MTBPS) said the amounts of the Infrastructure Fund are assumed to be R10 billion in 2024/25, R12 billion in 2025/26, R15 billion in 2026/27, R21.8 billion in 2027/28 and R26 billion in 2028/29.

Godongwana said that more work is being done to unlock more infrastructure projects for implementation.

He added that there is strong collaboration with government departments and other institutions, such as Infrastructure South Africa and the Development Bank of Southern Africa, to prepare four projects with an investment value of R8.4 billion in the telecommunications, water and sanitation sectors and transport. .

Godongwana said that the facilitation of trade across South Africa’s borders is an important enabler of economic activity, especially as the African Continental Free Trade Agreement is being implemented.

“Across our continent, infrastructure is underdeveloped and systems are outdated, leading to inefficiencies and long delays. This also generates crime, ”he said.

The MTBPS said that capital investment has been negatively affected by national lockdowns, contributing to under-utilization, but joint initiatives by the South African National Treasury, Infrastructure Fund and Infrastructure aim to improve scale, speed, quality and efficiency of infrastructure spending.

“This primarily involves creating a credible portfolio of projects, conducting project evaluations and technical analysis, and attracting private sector participation and financing,” he said.

Public Private Associations (PPPs), as previously noted by the government, will become more important in the delivery of infrastructure.

The MTBPS said that the National Treasury completed its review of the public-private partnership framework in May 2021 and that policy changes based on the recommendations will be announced in the 2022 Budget.

He said the recommendations include simplifying regulations, eliminating delays in approval and implementation, standardizing project preparation and building capacity at all levels of government.

The 2021 Budget stated that the scope of the municipal infrastructure grant would be expanded to help municipalities improve their asset management practices, but the MTBPS confirmed that this change has been delayed.

He said this means that the funds will not be allocated to a new indirect component of the grant in early 2022/23.

“The funds can be transferred during the year if the Department of Cooperatives

Governance and Traditional Affairs does the necessary work to identify the municipalities that need this intervention, ”he said.

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