SA committed to lowering deficit: Gordhan

Cape Town - Investors should not doubt South Africa’s ability to cut its budget deficit over the next three years despite a much higher-than-expected gap in its 2011/12 budget, Finance Minister Pravin Gordhan said on Wednesday.
 
“Fortunately South Africa hasn’t been around for one day. It’s been around for a while with a good fiscal record that goes back over 10 years,” Gordhan told Reuters in an interview.
 
“In policy terms, we’re very clear about where we want to go.”

Gordhan estimated a budget deficit in the year to March 2012 of 5.3% of gross domestic product, the same ratio which is officially projected for the current fiscal year, but said the shortfall would drop to 3.8% by 2013/14.

Economists polled before the budget, which comes a few months ahead of municipal elections, had been expecting a deficit of 4.5% - not least because Gordhan himself had indicated 4.6% in a budget review in October.
 
The yield on 15-year government bonds rose about 10 basis points, indicating some investor concern but no panic.
 
Denying that government spending was not being reined in as forecast, Gordhan laid the blame for lower-than-expected tax receipts on a slow recovery from the 2009 recession, particularly by companies.
 
“Investors will still probably understand that we’re still recovering from a recession,” he said.
 
“We’re quite determined that we don’t want to kill growth in this country like some others might want to do elsewhere in the world. We don’t want to impose austerity measures on our population.”

Gordhan also denied that a government gross domestic growth forecast of 3.4% for this year, a slight reduction from 3.5% projected in October, was consciously conservative.

“There's no deliberate effort to downplay it all. That’s how we see the picture. If it’s better, all the better,” he said.
 
In his budget, Gordhan said he would continue to support the central bank in its effort to weaken the rand by buying dollars.
 
However, the currency gained on Wednesday after he introduced no new measures to rein it in and central bank governor Gill Marcus said she was not targeting any particular level.

“Our general proposition is that we want a stable and competitive exchange rate,” Gordhan said. “We want a balance between what is good for our exporters and at the same time a balance that ensures that those things we want to import don’t cost us too much.”