The South African Post Office (Sapo) will receive R2.9-billion over the next three years to reduce its debt levels, the National Treasury revealed on Wednesday.

Sapo has faced financial difficulties and liquidity problems since 2007. Daily Maverick in May reported that Sapo owed many of its suppliers money. Sapo reportedly only received 50% of post rental revenues, contributing to its high debt levels.

Parliamentary Monitoring Group said Sapo received R3.7-billion in December 2017 from National Treasury towards recapitalisation, but continues to struggle.

"Sapo's turnaround strategy has faced huge challenges. The strategy has never been sufficiently funded. Rather, funding has always addressed historical issues and not investment requirements for growth. Sapo has suffered from insufficient working capital and from the fixed cost base, which continued to exceed revenues, in part owing to the unfunded public sector mandate that costs Sapo over R700-million a year to support."

Sapo reported a R674-million operating loss in 2018, with a total loss of R908-million.

Meanwhile, the Medium Term Budget Policy Statement further revealed that healthcare, education, basic services and social grants continue to receive priority in government budget allocations.

Over the medium term expenditure framework (MTEF), Treasury will commit R3.3-trillion (56%), of a total R5.9-trillion resource to education, health, water and electricity provision, and social grants.

Despite a constrained fiscal environment, these areas grow in real terms by 2% to 3% each year.

Government spending is expected to total R5.9-trillion over the MTEF period, growing at a yearly average of 7.8%, reaching R2.1-trillion in 2021/22.

Despite moderate economic growth projections, spending growth will outpace inflation, with real non-interest expenditure growth expected to average 1.9% over the period.

The expenditure ceiling remains unchanged from the 2018 Budget. Of the R32.4-billion of expenditure reprioritised over the medium term, R15.9-billion goes towards fast-tracked spending on infrastructure programmes, clothing and textile incentives, and job creation under the Expanded Public Works Programme.

Additionally, changes to grant structures amounting to R14.7-billion will promote the upgrade of informal settlements in partnership with communities. Housing subsidies amounting to R1-billion will be centralised to better support middle- and lower-income home buyers.

Other in-year allocations include R800-million for school infrastructure backlogs, R166-million has been added to the national health insurance indirect grant component to procure medical equipment and to design a new academic hospital in Limpopo, and R546-million has been allocated to address the critical shortage of medical professionals in the health sector and to procure beds and linen for healthcare facilities.

Moreover, the Department of Justice and Constitutional Development will reprioritise funds to Legal Aid South Africa to retain public defenders. The Integrated Justice System Modernisation Programme is intended to make South Africa safer by sharing electronic information across the justice system.

Treasury on Wednesday said it would also consider an allocation in the 2019 budget to enable the commission of inquiry into allegations of State capture to continue its work in 2019/20.