What is the MTBPS?

The MTBPS is also referred to as the “mini budget”. It allows government departments to apply for adjustments to their budgets, apply for roll-overs, and request additional funds for unforeseeable and unavoidable expenditure. It indicates how government intends allocating the upcoming national budget.

The mid-term budget also includes information on:

• Spending estimates for the first half of the current year (2021);

• Any adjustments to the proposed revenue and spending estimates for the second half of the current year; and

• Outcomes for the previous year. For example, the 2021 mid-term budget to be presented on Thursday will include outcomes for 2020/21 as well as half-year (April to October) spending estimates for 2021/22 for all the national votes and for education, health, social development and other functions for each province.

 

Why is the MTBPS important?

The mini-budget plays a critical role in the entire budgetary process because it sets the tone for the fiscal framework* for the next national budget. It also provides Parliament and the country as a whole with an update on how Treasury perceives the present economic situation. (*the fiscal framework refers to the broad budgetary aggregates of total revenue, expenditure and borrowing for a given year).

The budget is the most important economic instrument of government, as it reflects the country's socio-economic policy priorities by translating priorities and political commitments into expenditures. Minister Godongwana is expected to present South Africa’s economic outlook as analysed and forecasted by the National Treasury. The economic outlook is a forecasted expectation for how well the economy will perform during the upcoming quarter, year or the long run. This would include projections for inflation, productivity growth, unemployment and balance of trade. The economic outlook is critical and watched closely by investors, ratings agencies, tax payers and citizens at large.

Notably, the question of rolling power outages has become one of the most pressing challenge facing the South African economy and its recovery currently. Analysts have warned that Eskom’s power fleet shows no signs of recovery and that load shedding is likely to remain, or even worsen over the short term. It is to be seen what the Minister of Finance has in store as part of government efforts to address this challenge.

 

When is the MTBPS tabled?

It is tabled three months before the national budget, in October every year (deferred to November 11 this year on account of local government elections). It is tabled immediately after the BRRR process (scrutinizing of annual reports).

 

Which legislations are tabled during the MTBPS?

During the tabling of the 2021 Revised Fiscal Framework and Revenue Proposals (MTBPS), Minister Godongwana will concurrently introduce five Bills: Division of Revenue Amendment Bill; Adjustments Appropriation Bill; Rates and Monetary Amounts and Amendment of Revenue Laws Bill; Taxation Laws Amendment Bill and the Tax Administration Laws Amendment Bill.

 

What is the role of Parliament in relation to the MTBPS?

Members of Parliament are elected by the people to represent them, therefore Parliament authorises the executive to spend, tax, and oversee executive action on behalf of the people of South Africa. Through effective budgetary oversight, Parliament can go a long way in addressing socioeconomic challenges such as poverty, inequality and unemployment.

The MTBPS makes it possible for Parliament and the public to interact with government's budget plans several months ahead of the budget set for February 2022. One of the mechanisms used by Parliament is through committee oversight over departments when they review the effective and efficient use of available resources. The process is known as the Budget Review and Recommendations Reports (BRRRs), and they must be tabled in the National Assembly before the MTBPS reports are adopted.

 

What happens after the tabling of the MTBPS?

After the tabling of the MTBPS the committees of Parliament (Appropriations and Finance) must conduct public hearings with relevant stakeholders. Submissions are received from the stakeholders during the public hearings. Thereafter, the committees prepare a report and table it in the National Assembly, that further scrutinise expenditure and revenue proposals.

Thirty days after the tabling of the MTBPS, the finance committees of the two Houses must report on the proposed fiscal framework and the Appropriations committees must report on the proposed division of revenue and grant allocations to provinces and local governments. The Division of Revenue Amendment Bill (DORA) is then considered.

 

MTBPS processing timelines

Upon its delivery on Thursday, 11 November, the mini-budget will be processed in a prescribed manner as outlined in the Money Bills Act. The timelines (provisional) ** are as follows:

11 November to 23 November

The Standing Committee on Finance called for submissions on the 2021 Revised Fiscal Framework & Revenue Proposals (MTBPS) from the public on 28 October. This is an opportunity for members of the public to have their voices heard and to give meaningful input to budgetary processes. On 17 November, the Committee will hold public hearings on the proposals and will hear responses from National Treasury to the public submissions on 19 November. The Committee is expected to adopt its Report on 23 November.

24 November

The National Assembly will consider the Standing Committee on Finance’s Report on 2021 Revised Fiscal Framework & Revenue Proposals, and the report will be tabled for adoption on this day.

The NCOP will also consider, report and adopt the fiscal framework.

10 December

The two Houses of Parliament, will be expected to take decisions on the Revised Fiscal Framework & Revenue Proposals, and the attendant Bills by 10 December 2021.

 

**the dates are provisional, per the latest Fourth Term Parliamentary Programme adopted by the National Assembly Programming Committee on 09 November.

 

Sources

Parliament: The Medium Term Budget Policy Statement (MTBPS)

The Role of Parliament in the Budget Process