S.Africa 2013 budget deficit seen at 4.6 pct of GDP

CAPE TOWN (Reuters) - South Africa expects its budget deficit to widen further than previously thought in the current fiscal year ending in March as disruptions in the mining sector add to already subdued economic growth, Finance Minister Pravin Gordhan said on Wednesday.

In his three-year budget tabled to parliament, Gordhan said previous deficit estimates for the years to 2015/16 had also had to be raised as revenue collection from companies and individuals is expected to underperform.

Gordhan said the budget deficit for 2013/14 would be 4.6 percent of GDP, a shade lower than 4.7 percent forecast by economists.

Tax revenue for this year is now likely to be 16.3 billion rand below 2012 projections, while 2013/14 and 2014/15 is expected to underperform by 13.2 billion rand and 27.8 billion rand respectively.

"This underperformance began in August 2012 with the outcome in the second half of the year 5.7 percent lower than in the first half, owing to mining sector disputes and sluggish employment growth," the budget said.

Unrest in South Africa's platinum belt left more 50 people dead last year, and is estimated to have cost the economy $1.1 billion. Miners stayed away from work and went on strikes without pay.

Combined with the chronic joblessness limiting South Africa's tax base, Gordhan forecast the 2014/15 deficit at 3.9 percent.

The public sector borrowing requirement increases to 7.4 percent of GDP in 2012/13, from 7.1 percent projected last year, while the primary balance on the main budget - the gap between revenue and non-interest spending - is seen at 3 percent this year, narrowing to 0.9 percent in 2015/16.

Gordhan said expenditure would not increase, as announced in October. The government is drawing down on its contingency reserve while departments are trimming their spending projections on some projects, he said.

"With economic growth weaker than anticipated and revenue collections below projection, the fiscal environment is more constrained than before," he told parliament.

Source: http://news.yahoo.com/africa-2013-budget-deficit-seen-4-6-pct-131839561--business.html

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