In a R1.1 trillion budget, Finance Minister Pravin Gordan sought to maintain a balance of maintaining the state’s contribution to growth and development while ensuring fiscal sustainability.
In line with the countercyclical fiscal stance, the Minister said the budget deficit remains substantial at 4.6% of GDP in 2012/13, but narrows to 3% in the year as economic activity accelerates.
Over the medium term, slower growth in public spending, combined with rising revenue, will strengthen the sustainability of the fiscus and the stabilisation of public debt will arrest the growth of debt-service costs.
Gordhan said the government will begin to shift the composition of spending from consumption towards capital investment while moderating growth in the public-sector wage bill, and stabilising the growth in interest payments will allow more funds to be spent on infrastructure.
Key features of the fiscal outlook will include real growth in non-interest expenditure averaging 2.6%. The Minister said additional allocations of R55.9bn over the next three years, including R9.5bn for an economic support package.
“There must be a shift from consumption to capital spending so that, from 2014/15, new borrowing will support investment.
“South Africa’s finances are in a good health. A budget deficit of 4.6% of GDP is projected in 2012/13. We plan to reduce the deficit to 3% in 2014/15 and public debt will stabilise at about 38% of the GDP,” he said. bernards@ thenewage.co.za