CAPE TOWN (Reuters) – South Africa expects a budget deficit of 3.9 percent of GDP for the 2015/2016 financial year, wider than its 3.6 percent forecast in October as weak economic growth keeps revenues low, Finance Minister Nhlanhla Nene said on Wednesday.
Substantial upcoming debt repayments meant government could no longer postpone raising additional revenue, including an increase to personal income tax rates, Nene said in his 2015 budget presentation to parliament.
“Today’s budget is constrained by the need to consolidate our public finances, in the context of slower growth and rising debt,” Nene said.
The government’s debt stock will increase by about 550 billion rand ($48 billion) over the next three years to 2.3 trillion rand by 2017/18.
The Treasury will cut spending by 25 billion rand over the next two years, while maintaining core social and economic programmes, its budget review tabled before parliament said.
The government has increased its borrowing over the last five years to try and support its economy after the 2008/09 global financial crisis, resulting in net debt nearly doubling to 40.8 percent of GDP by 2014/15.
The Treasury said debt would stabilise at 43.7 percent in 2017/18.
