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Revenue rise helps SA cut deficit

Pretoria - Finance Minister Pravin Gordhan said on Friday the 2010/11 fiscal deficit was 5.0% of gross domestic product (GDP), slightly lower than initially forecast due to higher-than-expected tax collection.

Gordhan had previously forecast a deficit of 5.3% of output for the year ended March 31.

The South African Revenue Service (Sars) collected R674.2bn in revenue, slightly more than the target of R672.2bn, Gordhan said.

"The remarkable performance that Sars is reporting indicates that our economy is recovering," Gordhan said.

The bond market firmed slightly after Gordhan's announcement, with the 2015 bond yield slipping to 7.81% from 7.82% and the 2026 yield also retreating one basis point to 8.94%.

Gordhan said the economic recovery was expected to continue in the short term, and he reiterated his growth forecast of 3.4% for 2011, rising to 4.4% by 2013.

He said spending for 2010/11 was R891.3bn, slightly lower than figures anticipated in the 2011 budget.

Gordhan said it was still unclear what the impact of higher oil prices would be on economic growth.

"In terms of the oil prices ... that is something ... finance ministers and central bankers around the globe are looking at. Whether they will undermine growth remains to be seen," Gordhan said at a briefing.

South Africa is a net importer of oil and fuel prices have risen by 20% since the start of last year, with further hikes expected.
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