#MTBPS2015: Nene revises growth down
With pressure on the South African fiscus showing no signs of easing as yet, Finance Minister Nhlanhla tabled a medium-term budget policy statement (MTBPS) that made for sombre reading as he revised growth forecasts downward significantly.
“The MTBPS projection is that the South African economy will grow at about 1.5 percent this year, rising marginally to 1.7 percent next year,” Nene said in the National Assembly on Wednesday.
In February, Nene had predicted the economy would grow 2 percent this financial year and 2.4 percent next year.
Power constraints, which have cost the economy one percentage point in growth, are expected to continue to batter the economy as government tries to add more power to the grid through its infrastructure build programme and by bringing more independent power producers on board.
“Electricity supply constraints, falling commodity prices and lower confidence levels have resulted in our growth forecasts being revised lower,” the minister said.
Tax revenue targets have also been revised downwards by a whopping R35 billion over the next three years.
“Gross tax revenue is revised down by R7.6 billion this year, and by R35 billion over the three-year period,” Nene said while delivering his medium-term budget policy statement in Parliament.
Nene blamed the revision of tax targets on the slowdown in economic activity, coupled with declining commodity prices, which meant corporate income tax collection would take a hit.
The budget deficit was expected to come in at 3.8 percent of GDP (gross domestic product) this year, and was expected to decline further to 3 percent by the 2017/18 financial year.
Spending caps would remain in place over the medium term, with Nene adding that any changes to expenditure would need to be coupled with “corresponding revenue measures”.
“If further steps are needed to protect the public finances, we will take them. We are are staying the course,” the minister said. - ANA
(File photo: Gallo Images)