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Cape Town - The government is experiencing a revenue squeeze and will “cut its clothes according to its cloth”, Finance Minister Pravin Gordhan said in his Budget Speech on Wednesday.
But South Africans should not be worried that the government will cut expenditure to the point “where people will be placed in a position of austerity”.
This message by Gordhan should comfort the business and investment world, as well as ordinary South Africans.
Gordhan said at a press conference before he delivered his
speech in parliament that SA still has stable economic growth and a stable
fiscus, although adjustments have to be made.
“There are no big fiscal fault lines," he said.
However, he did not shy away from the downsides and said "we are not and should not be comfortable living into the future” with the estimated loss of R16.5bn in tax revenue in the 2012/13 tax year.
The budget deficit also increased from an adjusted 4.6% of gross domestic product (GDP) to 5.2% of GDP in 2013/14. However, it should come down to 3.1% of GDP by 2015/16.
The increase in government expenditure over the coming three
years has been cut from 2.9 % to 2.3% per year. The contingency reserve has
also been restructured (cut by about R2bn) for 2013/14.
This enabled Gordhan to give tax relief of R7bn to individual tax payers.
Gordhan said the government cannot be as expansive as it would like to be. “We have to do things differently. But we have many opportunities to reposition SA.
"It will be a long haul but if we all do our part, our wishes will turn to reality.”
Gordhan said that to fight the revenue squeeze, the government is also looking at using its assets more efficiently with regard to development, but stressed that this does not mean privatisation is on the cards again.
In respect of social spending and social grants (raised on average with less than 5%), Gordhan said the government would try to balance the need for equity with available resources.
“We are committed to the principle that most people should
earn their income from work. But seeing the inequities of the past, we will not
abandon people so that they will all have opportunities,” he said.
- Fin24
* Visit our 2013 Budget section for full coverage of Finance Minister Pravin Gordhan's National Budget speech.
