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Treasury has been forced to make painful revisions to the latest Medium-Term Budget Policy Statement, which updates government’s spending plans over the next three years, after its expectations in the February Budget turned out to be over-optimistic.
Government now expects to earn almost R57 billion less in taxes than it previously forecast. Much lower commodity prices (due in part to a Chinese demand) hit mining profits, while load shedding, Transnet’s woes and weak local growth also weighed on other tax income.
Treasury also didn’t fully budget for a 7.5% public sector wage hike, which has added billions to government spending this year. Some 55 000 civil servants now earn more than R1 million a year.
