The National Budget: Overview
The National Budget is when the South African Executive formally presents the state of the South African economy, its proposed allocations of funds to various organs of state and proposed amendments to tax laws aimed at facilitating appropriate, rather than simply increased, revenue collection.
The National Budget is tabled in Parliament as a document titled 'the Budget Review.' The Budget Review contains an overview of the fiscal and economic performance of the country over the previous financial year and proposed allocations of the revenue pooled into the National Revenue Fund. The full National Budget incorporates a number of documents related to the Budget Review, including the fiscal framework, the draft Division of Revenue Bill and the draft Appropriations Bill.
The Four-Stage National Budget process
The Budget drafting process occurs over roughly 18 months, from before the start of a financial year on 1 April, to after the conclusion of that financial year, which ends on 31 March. This process comprises four stages and three of the four stages are simultaneously underway at any given time. The four stages are: formulation, legislative authorisation, implementation and evaluation.
Formulation - Stage 1
The Budget speech delivered by the Minister of Finance each year is the culmination of months of preparatory work by the government, led by National Treasury. Prior to the Budget Speech, the various organs of state that had been funded from the fiscus in the previous year, in collaboration with National Treasury prepare zero-base draft budgets. These draft budgets are compiled considering the organ of state's achievement of the priorities set out in the preceding year's annual performance plan, required under the Public Finance Management Act 1 of 1999. It must also be considered whether any unspent funds in a department can be rolled over to the next budget, and rollover requests must be made formally to National Treasury. National Treasury then consolidates all the proposed departmental or entity budgets into the draft budget for tabling in Parliament.
Parliament has an oversight role over the performance of organs of state and this feeds into the budgeting process. This is provided for in the Money Bills Amendment Procedure and Related Matters Amendments Act 13 of 2018. This is done using the Budgetary Review and Recommendations Reports (BRRRs). These reports allow various committees to annually assess government performance and audit outcomes but also allow the National Assembly (NA) to make proposals on the forward use of resources. BRRRs asses every government department's service delivery performance given their allocated resources. They also report on whether expenditure has secured value for money and recommend revised allocations where necessary.
In summary, the budget formulation stage sees policy priorities translated into annual performance and strategic plans for organs of state, including government departments. The deliverables under these annual performance plans must be funded and this informs the scope and content of the draft budgets ,which are compiled by National Treasury into the National Budget.
Legislative process - Stage 2
The legislative process begins when the Budget Review ,and related draft Bills are tabled in Parliament during the Budget Speech by the Minister of Finance in February of each year.
Following this, the Portfolio and Select Appropriations committees then consider and hold hearings on the fiscal framework, the Division of Revenue Bill and Appropriations Bill. The budget votes of each government department are then tabled and debated in the various committees of parliament that deal with specific topics. Parliament then debates each budget in extended public committees held in plenary. The law specifically makes provision for public participation at this stage of the legislative process, which allows for the input of civil society and interest groups in the allocations to be made to various organs of state.
Following the legislative process and considering the public's comments, Parliament then typically passes the Appropriations Bill four months after the start of the financial year. The adjustments budget is introduced six months into the financial year and provides for any adjustments to departmental budgets.
Implementation - Stage 3
Once the budget has been passed, funds can be allocated to government departments and other organs of state, and government is able to spend the allocated funds in pursuit of the objectives set out in the various strategic and annual performance plans.
The portfolio committees of the NA, and to an extent the National Council of Provinces (NCOP), are mandated to monitor and assess the performance and expenditure of the respective government departments against their budgets and ensure the effective and efficient use of the funds.
Throughout the implementation period, the public is able to engage with the implementation and provide input through engagements with the responsible ministry, through a parliamentary constituency office or correspondence with parliamentary committees. However, at this stage there is no legal obligation for this input to be incorporated into the Budget.
Auditing and assessment - Stage 4
After the end of the financial year, all organs of state have their spending performance assessed against the budget allocation. The auditing stage also involves investigations by independent audit institutions, such as the Auditor General of South Africa, into the various organs of state's compliance with spending and procurement regulation, in particular the Public Finance Management Act 1 of 1999. The audit reports are then published and reviewed by Parliament.
How you can participate in the 2023 National Budget Speech
On 22 February 2023, the Minister of Finance will present the Budget Speech to the South African Parliament.
Public participation is a key part of the drafting process for the National Budget. National Treasury has invited South Africans to share their suggestions for the National Budget. People may submit views on any aspect of the National Budget, including:
- municipal finances
- current and proposed government spending priorities
- addressing the budget deficit
- stabilising State-Owned Entity finances
- managing the energy crisis
- tax measures
- debt sustainability
If you would like to contribute, your comments may be sent to the National Treasury website (click here). Twitter: @TreasuryRSA and Facebook: National Treasury RSA with the hashtag #TipsForMinFin and #Budget2023.
