Recession-bound South Africa sees wider budget deficitsStaff Writer | October 25, 2018
South Africa predicted wider budget deficits and cut growth forecasts in a bleak budget on Wednesday that focused spending on infrastructure, manufacturing and agriculture to boost the recession-bound economy.
Africa Finance Minister Tito Mboweni
"We are trying to make the best out of a difficult situation," he told reporters before making his maiden budget speech in parliament.
Africa's most industrialised economy is struggling with ballooning debt that risks pushing its sovereign credit ratings deeper into "junk" territory. Cash-strapped state firms and high public wages have also strained government finances, putting in jeopardy plans to reduce a stubbornly high unemployment rate before national elections next year.
The Treasury estimated the budget deficit would widen to 4 percent of South African gross domestic product in the 2018/19 fiscal year from 3.6 percent forecast previously, and then rise to a 4.2 percent in the next two years. It also halved the growth forecast for this calendar year to 0.7 percent.
In the three years to 2020/21, the tax revenue is expected to underperform significantly, it added. South Africa's fiscal year runs from April to March.
The rand which was half a percent stronger before Mboweni's budget speech, turned weaker, falling nearly 2 percent. Government debt prices also fell. ■