Deficit might be double estimate

South Africa's budget deficit for November was R5,4billion, up from October's R3,3billion. The cumulative deficit for the 12 months to November is R12,6billion, compared with R11,7billion in the 2005-2006 financial year.

South Africa's budget deficit for November was R5,4billion, up from October's R3,3billion. The cumulative deficit for the 12 months to November is R12,6billion, compared with R11,7billion in the 2005-2006 financial year.

If the current revenue and expenditure numbers are extrapolated to the end of the financial year the government would run a budget deficit in excess of R18billion, more than twice the Treasury's estimate of R7,8billion.

This is because revenue collection slowed in November whereas expenditure picked up strongly compared with the previous financial year.

One of the areas of expenditure that showed a marked improvement was on the capital budget.

Capital spending has lagged behind budget considerably this year, but if the government continues to spend more than R770million a month for the remainder of the financial year, it will come close to spending the planned R6billion.

One can only hope that such capital expenditure improvements are taking place at provincial and local government level as well, where the bulk of capital spending on infrastructure takes place.

Under-spending of the provincial governments' capital budgets will only prolong the problem of poor basic services infrastructure, and ultimately constrain growth.

At current rates, revenue collected would be only 93percent of that budgeted for the 2006-2007 financial year, suggesting that efficiency gains by the taxman, the South African Revenue Service, have been overestimated, given that strong 2006-2007 growth indicators should otherwise lead to strong tax collection. - I-Net Bridge

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