South African budget deficit to narrow by 3.5%


South African Finance Minister Malusi Gigaba says government expects the budget deficit to narrow to 3.5% over the next three years.

The Minister says this when he tabled the 2018 Budget at the National Assembly on 21 February 2018.

“The consolidated deficit is projected to narrow from 4.3% of GDP in 2017/18 to 3.5% in 2020/21.”

“The main budget primary deficit closes over the [the next three years], helping to stabilise the gross debt-to-GDP ratio at 56.2% of GDP in 2022/23, and declining thereafter.”

Gigaba says the fiscal proposals will cause economic discomfort, but they are necessary to protect the integrity of the public finances.

“Acting now to strengthen the fiscal position will improve the outlook for the economy and increase space for future investment growth.

“It is the right thing to do. We dare not borrow irresponsibly, leaving it to future generations to repay,” he says.

The Minister says government’s fiscal interventions also demand greater efficiency in the use of funds across the public sector.

He says government recognised the need to shift spending away from consumption towards higher investment.

“Over the past decade, the public sector has invested ZAR2.2 trillion in economic and social infrastructure. Yet weaknesses in project preparation, execution and delivery have resulted in lengthy delays and cost overruns,” he says. 

“To improve this, government has established a Budget Facility for Infrastructure, to standardize and improve the management of public infrastructure projects.”

“To support higher levels of capital investment and maintenance, the state needs to contain the public-service wage bill. Government is working to ensure that the current wage negotiations process results in a fair and sustainable agreement.”

“This process will require careful consideration from all stakeholders.”

Expenditure ceiling revised down

Gigaba says the expenditure ceiling has been revised down marginally from what was presented in October.

He says, however, that the small revisions are underpinned by large reductions and re-allocations.

“In addition, all national and provincial departments were required to reduce their spending on administration. The reductions exclude compensation of employees, which is already subject to a ceiling,” the National Treasury said.

The National Treasury said that after taking account of the various adjustments to the framework, the expenditure ceiling has been revised down marginally over the medium term.

“In 2017/18, however, the expenditure ceiling is likely to be breached by ZAR2.9 billion as a result of the recapitalisation of South African Airways (SAA) and the South African Post Office.

“These appropriations total ZAR13.7 billion, partially offset by the use of the contingency reserve and projected underspending.”


About Author

Thabo Mphahlele is the BizNis Africa Head of Sales and Marketing. Mphahlele was previously MultiChoice Production Support Analyst responsible for developing and monitoring applications. In addition, Mphahlele develops and automates batch scripts and is responsible for the daily infrastructure maintenance at MultiChoice. As a Production Support Analyst, he is responsible for incident analysis solving , developing and constructing business reports for SQL and Oracle and implement change controls for the business. Additional responsibility includes monitoring system performance via SOA, Kibaba (Elasticsearch), H.P BSM, HP Sitescope. Mphahlele is responsible for creating infrastructure performance reports through HP Ops Analytics, monitoring payments via Splunk and in-house built-in tool and disaster recovery simulation and testing. At Nashua Mobile, he was responsible for application development and enhancing the web sites At South West Gauteng College, he was the IT Technician and Network Administrator. During his tenure at Double Digit Media, he was he focused on application and web site development for new and existing clients Mphahlele contributes as a Content Manager for BizNis Africa.

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