Treasury beats targets

Johannesburg - The finance minister may have been a little too conservative in his estimate of the country's budget deficit for the current fiscal year.

In his budget speech last month, Pravin Gordhan said the country's budget deficit for the 2009/10 fiscal year would be 7.3% of the gross national product, or about R177.8bn.

Last month the treasury's ultimate income was significantly more than previously expected.

The R58.57bn tax revenue collected in February was R3bn-plus more than the R55.53bn spent. Market expectation had been that the treasury would notch up a shortfall of some R14bn.

In the 11 months to end-February treasury had already received 89.2% of its budgeted income for the fiscal year. At the end of February 2009, this figure was only 87.4%.

The R509.8bn collected by end-February is however R155.88bn less than expenditure for the first 11 months of the fiscal year, which still indicates a significant budget deficit.

André Roux, head of fixed income at Investec Asset Management, says the better-than-expected revenue in February is good news for the current fiscal year to March 31, and that revenue collected could indeed exceed that budgeted for.

If this trend in the March figures is confirmed, he predicts that the income side of the budget could be between R10bn and R15bn better than the minister of finance thought possible a month ago.

According to Roux, the market can also have greater confidence that the actual expenditure for the fiscal year will be less than the budgeted expenditure, or at least will not exceed budgeted spending.

At a press conference in Johannesburg on Wednesday, Gordhan - together with Deputy Minister of Finance Nhlanhla Nene and South African Revenue Service commissioner Oupa Magashula - will announce the provisional results of revenue collection for the 2009/10 fiscal year.

- Sake24.com

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