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Cape Town – Government will introduce above-inflation adjustments for social protection spending to deal with the increase in VAT, according to the National Budget.
Delivering Budget 2018 to Parliament on Wednesday, Finance Minister Malusi Gigaba said increases in social protection spending will be 7.9%.
“Government will ensure social grants will continue to be paid without disruption,” Gigaba said.
Last year the payment of social grants was in a crisis after the Constitutional Court ruled that the contract between the South African Social Services Agency and Cash Paymaster Services, a subsidiary of Net1, was invalid.
The payment of grants by the Post Office is still being finalised.
The adjustment to social grants will partially relieve the pressures of the increase of VAT by one percentage point, Gigaba explained.
Spending on social grants is expected to be R150.8bn in 2017/18. This will grow to R189.7bn by 2020/21.
Old age, disability and care dependency grants for 3.7 million people will increase on April 1, 2018 from the existing R1 600 by R90 to R1690 and by a further R10 to R1 700 on October 1, 2018.
Child support grants for 12.8 million people will increase from the baseline of R380 to R400 on April 1 and to R410 on October 1. This is a 6.6% annual increase.
An additional R2.6bn has been added to social grants since the mini-budget to enable these changes, Gigaba explained.
Total spend on social protection is expected to be R178.3bn for 2017/18. This will increase from R193.4bn in 2018/19 to R223.9bn by 2020/21.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER