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MTBPS Hearings 2002

MTBPS Hearings 2002. Mazwai Securities. Fiscal Health. R8.1bn revenue overrun Notwithstanding SARS’ improvements, this was largely due to inflation 1 .6% budget deficit 41.4 % estimated debt to GDP Continued steady decline. Mazwai Securities. Meeting of Expenditure Objectives 1/2.

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MTBPS Hearings 2002

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  1. MTBPS Hearings 2002 Mazwai Securities

  2. Fiscal Health • R8.1bn revenue overrun • Notwithstanding SARS’ improvements, this was largely due to inflation • 1.6% budget deficit • 41.4% estimated debt to GDP • Continued steady decline Mazwai Securities

  3. Meeting of Expenditure Objectives 1/2 • Stated objectives • real growth in expenditure on public services with particular emphasis on social services and • enhancing municipal infrastructure and services • Efforts to achieve objectives • Increased infrastructure spending, welfare spending, safety • Increases in infrastructure grants and spending at national, local and provincial government. • Increased share of capital vs. current expenditure • Increased capacity building and restructuring grant to improve delivery capacity Mazwai Securities

  4. Meeting of Expenditure Objectives 2/2 • Room for improvement? • Nominal expenditure growth +8.7% from + 13.7% • Real (non-interest) expenditure +4.7% from +6.7% • Increasing deficit from 1.6% of GDP could support more aggressive spending Mazwai Securities

  5. Balancing Growth and Inflation • 2002 and 2003 inflation forecasts raised • from 6.9% and 5.8% to 9.2% and 7.2% • R3.4bn extra to compensate for inflation • Tax relief sensitive to inflation • Less aggressive personal tax cuts in 2003/04 • Surplus being diverted to loss on NOFP instead of spending • Fuel levy rise to be less than inflation • Marginal shift in bias towards growth away from inflation Mazwai Securities

  6. Omissions • Privatisation • No mention was made of Telkom’s IPO • Arms Deal • Inflation Targeting Escape Clause • The shifting out of the 2004 inflation target is consistant with the escape clause, • but there remains uncertainty as to the mechanics of absorbing future shocks Mazwai Securities

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