UPDATE 1-South Africa pledges to cut deficit, curb debt in mid-term budget

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(details, adds context)

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Pretoria, Nov 11 (Businesshala) – South Africa’s National Treasury on Thursday pledged to cut deficits and curb debt in its mid-term budget, saying it is looking forward to new long-term spending despite being unforeseen by high commodity prices. will not commit.

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Africa’s most industrialized country was hit hard by the COVID-19 pandemic last year, but its economy made an unexpectedly strong comeback in 2021 as global demand for its exports, such as metals, increased.

The Treasury now sees the deficit at 7.8% of gross domestic product (GDP) this fiscal year, 9.3% forecast in the main February budget, and gross debt at 78.1% of GDP in 2025/26 at 88.9%. February.

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Better estimates were influenced by the GDP rebasing by the statistics agency in August.

The Treasury said it would stick to a disciplined fiscal strategy and set a new target of limiting the deficit to 4.9% of GDP in 2024/25, the final year of its medium-term spending framework.

The plan is to achieve a primary budget surplus, meaning revenues will exceed non-interest spending from 2024/25.

The Treasury is now seeing a 5.1% expansion in GDP this year, compared to an estimated 3.3% in February.

“The economy has recovered faster than expected. Nevertheless, the recent spike in commodity prices, which has supported GDP growth and tax revenue, is considered temporary,” it said in its budget review.

“The government will not commit to new long-term spending in response to temporary revenue unpredictability.” (Reporting by Alexander Winning and Olivia Kumwenda-Matambo; Editing by Kirsten Donovan)

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