OWN CORRESPONDENT and AFP, Cape Town | Monday 7.45pm.
FINANCE Minister Trevor Manuel on Monday announced a revision of South Africa’s estimated budget deficit for the 1998/1999 financial year to 3,9% of gross domestic product, up from the 3,5% deficit projected in March.
Manuel said, however, that the government remains committed to reducing the budget deficit to 3% of GDP. “This target will now be reached in 2000/2001, a year later than planned in the budget, in order to maintain stability in the real level of government spending,” Manuel said. Economists have described the adjusted targets as “realistic”.
Citing a slowdown in the world economy, Manuel told parliament he has also revised GDP growth for 1998/99 down to 0,2%, from the 3% he estimated when he presented his Budget in March,. He also revised inflation upwards from 6% to 8%. In monetary terms, this year’s deficit is expected to be R2,2-billion ($383-million) higher than the first estimate, at around R25,9-billion rand ($4,5-billion), Manuel said.
A 3,5% deficit is expected for 1999/2000, falling to 3% in 2000/2001. Manuel said the government remains committed to reducing the budget deficit to 3% of GDP. “This target will now be reached in 2000/2001, a year later than planned in the budget, in order to maintain stability in the real level of government spending,” Manuel said. Manuel recommitted the government to stringent fiscal discipline as contained in its Growth, Employment and Redistribution macro-economic policy.
GDP growth is forecast to rise to 2% in 1999/2000, to 3% in 2000/2001 and 4% in 2001/2002. “The changes to economic conditions have meant that we have had to re-examine our projections of spending, tax revenue and borrowing,” Manuel said.