Budget in a nutshell

2011-10-25 14:15

Finance Minister Pravin Gordhan released South Africa’s three-year budget policy plan today. Here are some of the highlights.

Growth
The economic growth forecast for this year is cut to 3.1%, rising to 3.4% next year, 4.1% in 2013 and 4.3% in 2014.

Inflation
The headline consumer price index (CPI) is expected to average 5% this year and remain below 6% over the next three years, within government’s 3% to 6% target range.

Current account
The current account deficit is seen widening over the next three years from 3.4% of gross domestic product (GDP) this year to 3.8% next year and 4.2% in 2014 as import growth outpaces export growth.

Budget deficit

The Treasury plans to trim the budget deficit to 3.3% in the 2014/15 financial year from 5.5% in 2011/12.

Debt

National government net loan debt is projected to rise from just over R1 trillion at the end of 2011/12 to more than R1.5 trillion by 2014/15.

Taxes
Total government revenue, as a percentage of GDP, is seen falling slightly from an estimated 27.3% in 2011/12 to 27.0% in 2012/13 before reaching 27.7% in 2014/15.

Spending
Total government expenditure as a percentage of GDP is seen declining gradually over three years, from an estimated 32.9% in 2011/12 to 32.2% in 2012/13 and 31.0% in 2014/15.

The budget framework provides for a 5% yearly cost of living adjustment for public sector employees.

Revenue
Tax revenue projection for 2011/12 is cut by R13 billion to R728 billion from R741 billion – mainly on VAT receipt revisions – before recovering to R812 billion in 2012/13.

Tax
The government says it will consider policy measures to raise tax revenue if the economy fails to recover as predicted.

Job creation
Government will provide R25 billion over next six years to boost industrial development zones, assist job creation and support transition to a green economy.

Health
Treasury backs 10 pilots of the proposed national health insurance scheme, with further funding details expected in February next year.

Climate
South Africa is to strengthen climate change policies and seek global and private sector funding for green interventions over the next three years.

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