Bloomberg News

South Africa Won’t Change Debt Plan as Revenue Increases

April 13, 2012

South Africa’s National Treasury won’t change its debt plans even as the government collected more revenue than forecast because of a rebound in the economy, Director General Lungisa Fuzile said.

“It is hardly consequential in the bigger scheme of things to necessitate a change in plans,” Fuzile told reporters in Johannesburg today. “Economic data released since the budget have actually been generally positive, which supports our view that the economy is on more-sure footing.”

The government collected 742.7 billion rand ($93.8 billion) in the year through March 31, which is 4 billion rand more than forecast, trimming the budget deficit. The government’s borrowing requirement had been estimated to increase to 168.8 billion rand in the year through March 2013, from 152.7 billion rand this fiscal year, the Treasury said in February.

Economic growth will probably expand faster than the government’s forecast of 2.7 percent this year as manufacturing rebounds from two quarters of contraction, according to Trade Minister Rob Davies. Manufacturing, which accounts for about 15 percent of the economy, grew 4.1 percent February from a year earlier, the fastest pace since September.

‘Cautiously Optimistic’

South Africa can achieve a budget deficit of 4.6 percent in the 12 months through March 2013, Deputy Finance Minister Nhlanhla Nene said yesterday, according to a copy of his speech posted on the Treasury’s website. The fiscal gap narrowed to 4.5 percent in 2011-12, smaller than the 4.8 percent the government forecast in the February budget.

The worst expectations for the first half of the year aren’t likely to come to fruition, Davies said in an interview yesterday. Gordhan told reporters on April 1 that he is “cautiously optimistic” growth will be higher than the government’s estimate of 2.7 percent for 2012.

While some analysts have raised their estimates for growth, there are still risks to the economy, including the advance in oil, Fuzile said. Reserve Bank Governor Gill Marcus raised the bank’s estimate to 3 percent from 2.8 percent on March 29.

The rand dropped 0.6 percent to 7.9165 per dollar at 11:05 a.m. in Johannesburg, cutting the currency’s gain this year to 2.2 percent.

To contact the reporter on this story: Andres R. Martinez in Johannesburg at amartinez28@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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