Cape Town – The global economic recession has added more than R1 trillion to South African government debt.
Finance Minister Pravin Gordhan said government’s response to the global economic crisis has been among the best in the world.
“We were able to sustain spending programmes even as revenue fell, partly because our fiscal position before the crisis was so healthy.”
Gordhan told journalists that South Africa won’t be following the austerity route in moving forward.
“Government spending expanded from 28% to 34% of GDP (gross domestic product) in the wake of the recession. Our deficit widened by 6% of GDP between 2007 and 2011,” said Gordhan.
“At the same time we have succeeded in realising savings and reallocating resources amounting to more than R40bn.”
He said growth in South Africa slowed to just 2.5% this year, and revenue collection by government will be R5bn less than the February estimate.
“This means the budget deficit will be a projected 4.8% of GDP in the current year.”
Gordhan was briefing the media shortly before he was due to deliver his medium-term budget speech.
He said that South Africa’s fiscal policy is stable and sound.
“It takes between eight and 10 years to get out of a recession. Because the economic recovery is slower than anticipated, the budget deficit will be reduced more gradually.”