WHILE social sectors such as education and health are expected to get the biggest share of the Budget, expenditure on infrastructure development will also be prioritised to stimulate economic growth.
Finance Minister Pravin Gordhan will deliver his 2012 budget speech today which is expected to outline how the government intends to stimulate economic growth and job creation.
Gordhan is also expected to tell the nation how the infrastructure projects announced by President Jacob Zuma in his State of the Nation Address will be funded.
Senior economist at MMI Holdings, Sheshi Kaniki, said the lower rate of economic growth presented a twin problem for government revenue and expenditure.
"Social sectors - education, health and social protection account for the biggest share of the national budget. This is necessary given the high levels of poverty, the large healthcare burden and the importance of education in addressing unemployment and improving South Africa's competitiveness relative to other developing countries," Kaniki said.
"At the same time, directing expenditure towards economic development, particularly infrastructure expansion and maintenance, is essential for higher economic growth and employment creation."
Kaniki hinted that government would collect lower revenue than usual if the economy grew at a higher rate.
He said despite these challenges, there was an element of optimism in the 2012 national budget. He said optimism was created by the fact that at least 365000 jobs were created last year.
"This indicates that some of the job-creation initiatives introduced in last year's budget are beginning to bear fruit. Export sectors - manufacturing and mining - also contributed positively to employment despite the weak global environment," Kaniki said.
The 2011 medium term budget policy statement estimated a budget deficit of 5,2% for 2012.
"The low rate of economic growth combined with ongoing social needs and the ambitious infrastructure programme recently presented by Zuma could see the deficit exceed this estimate. Business and other stakeholders have however welcomed this emphasis on infrastructure development," he said.
Infrastructure to gobble large slice
WHILE social sectors such as education and health are expected to get the biggest share of the Budget, expenditure on infrastructure development will also be prioritised to stimulate economic growth.
Finance Minister Pravin Gordhan will deliver his 2012 budget speech today which is expected to outline how the government intends to stimulate economic growth and job creation.
Gordhan is also expected to tell the nation how the infrastructure projects announced by President Jacob Zuma in his State of the Nation Address will be funded.
Senior economist at MMI Holdings, Sheshi Kaniki, said the lower rate of economic growth presented a twin problem for government revenue and expenditure.
"Social sectors - education, health and social protection account for the biggest share of the national budget. This is necessary given the high levels of poverty, the large healthcare burden and the importance of education in addressing unemployment and improving South Africa's competitiveness relative to other developing countries," Kaniki said.
"At the same time, directing expenditure towards economic development, particularly infrastructure expansion and maintenance, is essential for higher economic growth and employment creation."
Kaniki hinted that government would collect lower revenue than usual if the economy grew at a higher rate.
He said despite these challenges, there was an element of optimism in the 2012 national budget. He said optimism was created by the fact that at least 365000 jobs were created last year.
"This indicates that some of the job-creation initiatives introduced in last year's budget are beginning to bear fruit. Export sectors - manufacturing and mining - also contributed positively to employment despite the weak global environment," Kaniki said.
The 2011 medium term budget policy statement estimated a budget deficit of 5,2% for 2012.
"The low rate of economic growth combined with ongoing social needs and the ambitious infrastructure programme recently presented by Zuma could see the deficit exceed this estimate. Business and other stakeholders have however welcomed this emphasis on infrastructure development," he said.
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