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What Is A Zero-based Budget?

Finance Minister Tito Mboweni will deliver a supplementary Budget Speech to the nation on Wednesday. After repo rate cuts, job losses and an economy that’s struggling more than before due to the impact of COVID-19, all eyes are on the minister as he lays down the law for spending and tax.

This Budget will be zero-based, which is different to the way we usually do it.

So what is a zero-based Budget? In essence, this Budget initially has no amounts set aside for any government department. Each department needed to itemise what they want to spend with a justification for its need. It is then scrutinised to see if it is essential, and is then either approved or denied by the minister.

In the past, the Finance Minister used the Budget from the year before, and each department was given an amount of money that they could then allocate as they saw fit.

This time, no one will receive more than they’ve asked for. It will also help prevent wasteful and irregular expenditure, as each department will only be given the money they have proven is essential .

This is the minister’s way of ensuring departments function within their means. Each rand will be accounted for, and money cannot be spent unless the department actually has it.