Finance

How the government spends every R100 of your tax money

Enoch Godongwana

Of every R100 spent by the government, R16.13 goes to debt-servicing costs, R13.70 goes to basic education, and R12.59 goes to social protection. 

This was revealed in an infographic by PSG Wealth following the Finance Minister’s Budget Speech last month, where South Africa’s dire financial situation was illustrated.

The minister revealed that for the 2024/25 financial year, the government is expected to collect R2.04 trillion in tax revenue. 

The government is expected to spend R2.37 trillion in the financial year as expenditure continues to outstrip revenue. This will result in a deficit of R332.4 billion, which is lower than the previous year’s deficit of R347 billion. 

The government will have to issue more debt and add to its already unsustainable debt pile to fund this deficit.

The government has consistently run budget deficits for the past 16 years, creating a large debt burden that needs to be serviced. 

South Africa will pay more than R1 billion a day in debt-servicing costs over the 2024/25 financial year. This is set to grow and is already the fastest-growing expenditure item in the country’s budget. 

Thus, R16.13 of every R100 spent by the government will be on debt-servicing costs, which include paying interest on the debt but not the costs associated with refinancing existing debt that is maturing. 

It was estimated in the last financial year that the government spent close to R500 billion servicing debt and refinancing it. 

When debt-servicing costs grow as they have done in South Africa, they crowd out spending on other more important areas of government expenditure, particularly public services. 

South Africa has already crossed the point where debt-servicing costs are the fastest-growing expenditure item on the budget and the third-largest overall spending component behind education and healthcare. 

However, when education is split into basic education and tertiary education while healthcare is broken up, debt-servicing costs make up the largest portion of government spending. 

Of every R100 spent by the government, R13.70 goes to basic education, R12.59 goes towards social protection, and R11.48 goes to health. 

The infographic below breaks down how the government spends R100 in more detail, courtesy of PSG Wealth.

Source: PSG Wealth

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