First thoughts on the National Budget
If there were any surprises in this year’s budget, they were primarily on the positive side.
The Minister not only stuck to his previously announced intentions to proceed with consolidating the finances of the South African government, albeit at a relatively slow pace so as not the jeopardise the expected gradual recovery in the economy, but he even tightened his projections marginally. For example, the projections for net government debt now show debt to stabilise at 38,5% of GDP compared with 39,7% previously, although the commensurate number for gross debt remains at 42,4%.
Slight upward revisions to revenue projections, combined with small downward adjustments to expected expenditure, will result in the budget deficit being on average about 0,5% of GDP smaller in the next three years than projected in the Medium-Term Budget Policy Statement in October 2011. Of course one can still question the feasibility of these intentions because they rely on some debatable assumptions, for example cost-of-living adjustments for civil servants averaging a below-inflation average 5% per annum in the next three years. In fact, the upward revision to the Nati