South Africa will use extra tax revenues for the 2006/07 fiscal year, and a larger budget surplus, to cut debt and reduce government bond issuance, the Treasury said.
Finance Minister Trevor Manuel announced on Saturday strong economic growth and more efficient revenue collection had boosted the tax take to R494-billion, exceeding the R489,7-billion forecast in the Budget in February, which itself was R29-billion over original estimates.
The overrun would help widen the country’s first budget surplus to about 0,6% of gross domestic product from an earlier forecast of 0,3%.
Government spending was seen slightly lower than predicted at R468-billion for the year to the end of March.
Manuel told the Business Report newspaper the surplus would be used to pay off debt rather than handed to government departments, many of which have been unable to spend their full allocations.
”We are not going to allocate it now. We don’t want to create any sense of looseness … that’s not the route we want to take,” he said in an interview.
Treasury director general Lesetja Kganyago added that government bonds worth R39-billion would mature in 2007/08 and the department would try to pay these off and not replace them with new paper.
Robust consumer spending has helped lift growth in Africa’s biggest economy to around 5% of GDP, boosting corporate profits and VAT receipts.
The Treasury has over the past five years used large revenue overruns to stimulate the economy through big tax cuts but opted this year to hold the windfall due to already high, inflationary, consumer spending.
The Treasury announced in the February budget an expected budget surplus of 0,6% for 2007/08 and a sharply lower borrowing requirement.
It added the government did not intend to borrow on world capital markets over the next two years. – Reuters