State will save R40bn over 3 years

2012-10-25 13:23

Finance Minister Pravin Gordhan has announced that government would save R40 billion over the next three years, enabling it to keep a lid on spending until 2014.

“We have again put every effort into finding savings, eliminating waste and reprioritising spending towards key social and development objectives,” Gordhan told MPs during his delivery of the medium-term budget policy statement this afternoon.

According to National Treasury documents, the savings, combined with drawdowns in the contingency reserve, will allow government to revise budget baselines without any increase in government spending.

The money will be partly used to meet the rising state wage bill, which is being pushed up by high public-sector wage settlements.

The state expects to collect R900 billion in tax revenue in the current fiscal year, rising to R1.2 trillion in 2015. Over the same period, spending is forecast to hit R1 trillion, for the first time in South Africa’s history, and then jump to R1.3 trillion in 2015.

More than a third of the spending will be on wages (R378.3 billion); followed by education (R220 billion); and defence, police and law (R141.7 billion).

The government will spend R121.7 billion on health and R124.5 billion on social protection, which includes welfare grants.

On the economic front, Gordhan said he expected the economy to grow at about 2.5% this year, but grow faster thereafter.

“As the global economy recovers, we expect to see South Africa’s growth improve over the next several years. Real GDP (gross domestic product) growth of 3% is forecast for 2013, rising to 4.1% in 2015.

“Factors that will contribute to an improved medium-term performance include expanded public-sector infrastructure investment, new electricity-generation capacity and strong regional growth,” he said.

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