/ 1 March 2013

Deficit rise ‘the result of low growth, not overspending’

We gauged the response across political and business spectrums following Finance Minister Pravin Gordhan's budget speech. It seems he won their favour.
We gauged the response across political and business spectrums following Finance Minister Pravin Gordhan's budget speech. It seems he won their favour.

The government is determined to reduce the deficit in a bid to satisfy international credit rating agencies, it would appear from the 2013 budget.

The increase in the deficit, which rose to 5.2% of gross domestic product rather than the projected 4.8%, was not the result of government overspending, but rather that expected revenue growth had not occurred.

In the case of personal tax – the biggest revenue source – and corporate tax, there were large drops of R12-billion and R11.5-billion respectively.

The solution proposed in the 2013 budget is to prioritise discipline. Over the next three years, R10.4-billion has been cut out of expenditure, although the budget still makes it possible for government to continue spending.

Real spending will rise by 2.3% over each of the three years, down from the 2.9% estimated in October last year.