South Africa recorded another huge budget surplus in September of R14,8-billion and the government is therefore well on track to meet its revenue targets, with revenue collected halfway through the fiscal year at 50,1% of the budgeted target.
However, a more pressing concern lies on the expenditure side, where only 23,7% of the capital budget of the national government had been spent halfway through the fiscal year.
The budget for September last year was a surplus of R9,1-billion and the cumulative deficit for the year so far is only R3,9-billion, exactly in line with the revised projected annual deficit of R7,8-billion, or 0,4% of GDP.
”Government is clearly on track to collect its projected revenue. Halfway through the fiscal year, revenue collected was 50,1% of the budgeted target. Expenditure was of a similar magnitude, at 48,1% of the budgeted amount,” say analysts’ firm RLJP.
A large proportion of revenue collection in September came from companies tax — according to RLJP, possibly due to the financial year-end for many companies falling in September. A full 36,8% of monthly revenue came from companies tax receipts, compared with an average of 21% for the year.
Expenditure for September was broadly in line with past trends, although the continuing underspending of the capital budget remains a concern.
The four biggest votes (departments) by capital budget — safety and security, correctional services, public works, and home affairs — account for 69,3% of the total capital budget between them.
”However, they have only spent 19,7% of their capital budgets on average, with public works and home affairs only able to spend 8% and 8,7% of their capital budgets respectively, to date. It seems almost impossible that these departments will spend their entire capital budgets by fiscal year-end,” says RLJP.
In the Medium-Term Budget Policy Statement this month, the finance minister announced that capital projects had been allocated billions more over the next three years.
”Obviously, these projects will be outsourced to the private sector, and many of these projects are currently on track to deliver within their budgeted time frames. But the inability to spend within government departments speaks to institutional problems, with a lack of capacity to implement, or an inability to manage capital projects on time, being two possible reasons for these ongoing problems,” says RLJP.
RLJP adds that all revenue and expenditure figures for September and the previous five months are calculated according to the February budget estimates, but from October onwards, the budgeted figures will be adjusted to reflect the Medium-Term Budget Policy Statement amendments and the adjusted estimates of national expenditure for 2006.
”This may result in some cumulative estimates of revenue appearing to be understated in the months to come. Expenditure for the year was hardly adjusted, and cumulative figures are not expected to vary by much as a result,” concludes RLJP.
Government revenue
September 2006: R52,8-billion
September 2005: R43,4-billion
Government expenditure
September 2006: R38-billion
September 2005: R34,3-billion
Budget surplus (deficit)
September 2006: R14,8-billion
September 2005: R9,1-billion
— I-Net Bridge