South Africa will confidently meet its budget deficit target of 4% GDP after the revenue service exceeded its tax target.
South Africa will meet or beat its budget deficit target of 4% of gross domestic product in the fiscal year that ended on Tuesday after collecting more tax than anticipated, Finance Minister Pravin Gordhan said.
The South African Revenue Service collected R899.7-billion of taxes in the year to March 31, more than its February target of R899-billion, Gordhan told reporters in Johannesburg on Tuesday. The final budget gap will only be known once data on government spending is finalised.
"The extra revenue we got in this financial year gives us an opportunity to start consolidating our fiscal position and reducing the amount of money we have to borrow," said Gordhan.
A weaker rand helped boost company tax collection from exporters and trade-related receipts, the minister said. The currency was down by 16% against the dollar in the fiscal year and had dropped by 0.6% to R10.59 to the dollar at 1.16pm in Johannesburg on Tuesday.
The government plans to narrow the budget deficit to 2.8% of GDP in the fiscal year ending in March 2017 from an estimated 4% this fiscal year.
"These sorts of tax collections achievements in the face of global uncertainty and inadequate growth in the South African economy is good, but ultimately it's better growth and better employment numbers that will give us the opportunity to spend more on the right things and get value for money," Gordhan said. – Bloomberg