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What is the purpose of the National Budget?

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What purpose the National Budget of South Africa serves in the country’s expenditure and distribution of funds, the Budget Speech, and what happens after the speech.


All the nations and their government’s have their own drafted budget that contains the allocated figures intended to be used in that year. A budget is a plan for the spending of one’s money, and nations also need a budget to manage their country’s expenditure.

The role of the National Budget is to ensure that people in South Africa are aware of the planned expenditure set aside by the government to meet the needs of both the people, and the needs for the development and sustainability of the country as a whole.

South African National Budget

Every year, a budget speech is delivered by the Minister of Finance of South Africa in which he tables the proposed National Budget of the country for the fiscal year. This is done in front of the members of Parliament and is broadcast on many different channels for South Africans to view or listen to.

This provides South African citizens with transparency about the country’s finances, to know what the government intends to do to benefit them and lead the country towards economic recovery and sustainability as well as to deliver on the services that many communities need.

What is the purpose of the National Budget?

The National Budget plays an imperative role in the economic activities planned for the country for the given year. In the presentation of the Budget Speech, the Minister of Finance tables various financial proposals contained in the Division of Revenue Bill, the Appropriation Bill, the Adjustments Appropriation Bills, the Estimates of National Expenditure, the Budget Review, and the Budget speech.

The budget provides an overall outline of the state of the economy in South Africa, the amendments to tax, an indication of how revenue will be distributed across all domains of the government, and the distribution of expenditure across national departments. The budget serves as a practical means by which the government’s plans and policies can be tangibly translated into goods and services. Every expenditure is to be carefully and well thought-out for a specific time period.

What is the budget cycle?

The National Budget takes 14 months of preparation to put together, meaning that by the time a budget is introduced, the following year’s budget is already being prepared. The process is lengthy, because a number of time-consuming processes need to be finalised first.

Every budget is part of the ongoing three-year MediumTerm Expenditure Framework (MTEF). The planned expenditure for the (upcoming) first year of the MTEF cycle is fixed, while the two years thereafter are revised in the next budget cycle. This cycle is ongoing and repetitive.

What then happens after the speech?

After the proposed National Budget has been presented by the Minister of Finance, Parliament can exercise its power by approving it. The debate then moves to the committee corridor where, over the period of a couple of months, committees will hold hearings with the Minister of Finance, the Parliamentary Budget Office, Treasury, other relevant departments, statutory bodies, economists, and civil society, before a conclusive report is compiled.

The committees involved in this process include the Standing Committee on Finance, the Standing Committee on Appropriations, as well as their counterpart Committees in the National Council of Provinces (NCOP).

Parliament’s assessment of the budget

In the process of Parliament scrutinising the budget, it has to deliver in-year and end-year reporting on the budget. Budget Review and Recommendation Reports (BRRR) are compiled yearly during the midterm budget process. BRRRs are based on the work that the respective committees involved have done in terms of assessing the government’s performance and audit outcomes.

They are most important, however, in that they make recommendations and suggestions regarding the use of financial resources by different governmental departments and entities for the upcoming financial year. The Minister of Finance will receive the BRRRs for consideration.

Final thoughts

The purpose of a budget is to plan ahead for how one will control or manage their expenditure. A budget allows you to assess how your money is best spent, and also helps to prevent unnecessary spending, which, in turn, gives you better control of your finances.

The purpose of the National South African budget is similar, but in this case, has to do with the use and distribution of funds by the government for the benefit of the economic state of the country and to deliver necessary goods and services to South African citizens.


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