Medium Term Budget Speech 2013

The reason for this is that he has previously stated that the departure point for budget policy is the NDP and that there is a three year plan within that framework. He therefore kept to the plan and juggled the three constituents of the budget i.e. Revenue, Expenditure and the Deficit. In keeping to the plan he also showed that the ANC was not prepared to bow to pressure from other members of the alliance.

With the slow-down of growth it was expected that Revenue projections were not going to be as originally forecast and that increased Revenue was not going to be achieved through taxes on higher incomes. To achieve budgeted Revenue the economy would have to be stimulated, which the Minister is hoping to do through transport, energy and communications infrastructure projects. With the upcoming elections and the work of the Taxation Review Committee not yet complete, it was also unlikely that the Minister would make any significant changes to the existing tax system.

The only option open if the Deficit was not going to increase was the reduction of expenditure. It is welcome that the Minister chose to reduce wasteful expenditure and reprioritise other expenditure so that necessary stimulatory infrastructure expenditure would not be affected. The increasing interest debt on accumulated deficits was also a worry which apart from being the fastest growing expenditure item in the budget was causing a downward rating in the countries credit rating which in turn was causing increased borrowing costs.

In managing to keep the Deficit to the amount as originally budgeted and by keeping to the debt ceiling projections spoken about in 2012, hopefully the Minister has done enough to increase investor and rating agency confidence in the country so that future planned deficits can be financed by reasonably priced debt. A social pact between government, business and labour would also go a long way to help this balancing act of the Minister to succeed.