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Medium-Term Budget Statement: The Future of the R350 SRD Grant

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Medium-Term Budget Statement: The Future of the R350 SRD Grant

Medium-Term Budget Statement: The Future of the R350 SRD Grant. In 2022, Finance Minister Enoch Godongwana stated that no final decision had been made regarding the fate of the R350 Social Relief of Distress (SRD) grant and how it would be funded. The upcoming Medium-Term Budget Policy Statement (MTBPS) is poised to unveil whether the grant will continue or cease.

MTBPS Delivery and Location

Enoch Godongwana is scheduled to deliver the MTBPS to the Members of the National Assembly on Wednesday, 1 November, at 14:00 at the Cape Town City Hall.

History of the SRD Grant Extension

The SRD grant, initially introduced in May 2020 to assist impoverished households during the pandemic, has seen extensions. In 2022, President Cyril Ramaphosa declared the grant’s end in March 2023, but it was later extended until March 2024.

Uncertainty Over the Grant Replacement

During the 2022 MTBPS delivery, Godongwana emphasized that discussions concerning the replacement of the R350 SRD grant were ongoing. He noted that determining the grant’s future and its replacement required difficult trade-offs and financial decisions, potentially necessitating permanent increases in revenue, reductions in other spending, or a combination of both.

Efforts to Support Vulnerable Populations

In February of the same year, President Cyril Ramaphosa reiterated the government’s commitment to developing a mechanism for targeted basic income support for the most vulnerable, in addition to the SRD grant. This initiative aimed to leverage government data to ensure assistance reached those in need effectively.

Financial Challenges and Potential Cuts

South Africa’s financial situation remains precarious, with tax collection falling short of government projections by approximately R22 billion. Ironically, this shortfall is equivalent to the government’s monthly expenditure on social grants, constituting 17% of tax income. As a result, the future of SASSA SRD grants is uncertain, with options limited to significant cutbacks or a potential increase in VAT, which appears unlikely in the lead-up to the 2024 national elections.

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