adminPretoria. – South Africa’s government will postpone some of its spending programmes to help curb the budget deficit as economic growth slows, Finance Minister Nhlanhla Nene said.“We no longer have that much fiscal space and therefore we need to actually apply much more stricter fiscal rules,” Nene said in an interview with Bloomberg TV in London today.
Africa’s second-largest economy will probably expand 1,8 percent this year, the slowest pace since a 2009 recession, straining the state’s ability to meet its budget-deficit targets.
The government had pledged to reduce the gap to 2,8 percent of gross domestic product in the year through March 2017 from an estimated 4 percent this year, and restrict debt to 48,3 percent of GDP.
Nene, who has vowed to stick to the expenditure ceiling set by the National Treasury, will present his first budget update to lawmakers in Cape Town next week as civil servants are demanding a pay raise that’s more than double the inflation rate.
Consumer prices increased 6,4 percent in August from a year ago, fuelled by a 5,3 percent drop in the rand against the dollar since the start of the year.
“The medium-term budget policy statement that we are tabling needs to come up with a better fiscal package that addresses that challenge of curbing spending,” Nene said.
Wage increases in excess of inflation plus 1 percentage point will threaten jobs, he said. In June, Standard & Poor’s lowered South Africa’s foreign-currency rating to one level above junk, while Fitch Ratings assigned a negative outlook on the country’s debt. Ratings companies have warned of further downgrades as growth slows and fiscal targets come under pressure. – Bloomberg.
Online Reporter