Cape Town - As economic growth improves, the government aims
to lower the budget deficit to between 3% and 4% of gross domestic product
(GDP), Finance Minister Pravin Gordhan said on Tuesday.
Delivering his budget vote speech in parliament, Gordhan said reducing the deficit would allow for the substantial borrowing requirements of Eskom, Transnet and municipalities.
"The National Treasury will develop the fiscal
guidelines further this year. Reporting on this framework will strengthen the
ability of parliament and the public to assess the long-term soundness of our
fiscal stance," Gordhan said.
He said that well-managed expenditure targeted at social and
development priorities is also a fiscal policy objective.
"Once again, in this year's budget process, we will
seek to improve the efficiency of public service delivery through savings and
targeted cost effectiveness measures.
"Now that performance targets and measures associated with the government's outcome priorities have been finalised, these will play an enhanced role in the assessment of spending plans and reprioritisation of resources," Gordhan said.
Preliminary revenue and spending estimates suggest that the consolidated budget deficit for last year was 5% of GDP, said Gordhan."This is a pleasing outcome by comparison with the original budget estimate of 6.2% tabled in February last year, which mainly reflects the recovery in revenue associated with an improved economic growth performance," he said.
Growing wage billHowever, he expressed concern about the government's growing wage bill.
"While government personnel expenditure exceeded the original budget estimate by nearly R20bn last year, spending on maintenance of infrastructure and capital works fell short of the budget projection by about the same amount. This is not a satisfactory result," he said.
Gordhan said South Africa faced immense backlogs in public infrastructure maintenance.
"Investment in infrastructure is central to improving household service delivery and overcoming the spatial imbalances of both our urban and rural landscapes. It is vital that we should make better progress in infrastructure maintenance and investment, and we need to take care that this is not crowded out by an unsustainable rise in personnel spending," he said.
Gordhan said the 2011 Budget provided for consolidated personnel expenditure to rise from R314bn last year to R339bn this year, a rise of just less than 8%.
This would include a moderate expansion in public service employment and improvements in conditions of service.