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Pretoria - Finance Minister Pravin Gordhan has managed to restrain real growth in government spending to only 2% per year over the three-year rolling Budget, but this is still more than the 1% real increase promised in the medium-term expenditure framework.
The real rise in spending is far lower than the level of around 8% government became accustomed to during the boom years, when revenue was just pouring in and there was no reason to worry about the deficit.
Gordhan was able to increase spending by more than was planned in October because economic growth will be higher, bringing in more revenue, while government has also affected substantial savings.
By far the biggest increase in spending over the three-year rolling Budget is spending on interest, which is projected to rise by an average annual rate of 21.8% from 2009/10 to 2012/13.
This compares with miniscule annual average growth of 3.3% in spending on interest from 2006/07 to 2009/10.
Owing to past borrowing restraint, the percentage the cost of state debt will make up of total spending in the coming fiscal year will still be below 8%. But it rises to almost 10% in 2012/13.
The Budget Review said that of total non-interest expenditure of R830bn planned for 2010/11, rising to R946bn in 2012/13, the education sector receives the highest share (19.9%), followed by social protection (15.5%), health (12.6%), public safety and order (10.3%) and transport (8.1%).
- Fin24.com