Cape Town - SA is set to run a budget deficit of more than 6% of gross domestic product (GDP) in the present financial year, the national planning ministry said on Friday.
Africa's strongest economy, in its first recession in 17 years, has been hit by lower tax revenues, which are now likely to undershoot the budget target by about R70bn.
"The negative impact of the global slowdown is already being felt on the government budget, as well as government debt as a percentage of GDP," a statement on the release of South Africa's Development Indicators 2009 report said.
"The medium term budget balance as a percentage of GDP is projected to be a deficit of over 6% in 2009/10," it said.
The Treasury in February forecast a 3.8% deficit but the tax shortfall, due to weak consumer spending and lower company profits, and efforts to keep spending high to try boost the economy, have put that estimate out of reach.
Analysts are forecasting a gap of around 7% of GDP, with debt already rising sharply to cover the shortfall.
Finance Minister Pravin Gordhan will give updated numbers in his medium term budget on October 27.
Trevor Manuel, the Minister in the Presidency responsible for national planning, released the Development Indicators report, which measured 76 indicators, ranging from the economy to health, to present aggregate data on human development.
It estimated government's gross loan debt would increase to R737bn by the end of the 2009/10 financial year, up from R629bn the previous year.
"Debt is likely to rise during the current period of slow economic growth and high government investment, but not to the high levels of the late 1990s," the report said.
It also said that South Africans receiving social grants had almost doubled to more than 13 million people, compared to 7.87 million in 2004.
An analysis of the mean per capita income showed an improvement in the incomes of the poorest 10% of the country's population, from R783 per month in 1993 to R1 041 in 2008.
However, this did little to knock South Africa off its perch as one of the world's most unequal societies, as the income of the country's richest 10% increased at a faster rate.
"What we've seen in South Africa, the most unequal society with Brazil at the beginning of the '90s, is now singularly the most consistently unequal society in the world," Haroon Bhorat, an economics professor, told journalists at the reports release.
- Reuters