Cape Town - Finance Minister Nhlanhla Nene warned on Monday that if growth remained weak, the government would struggle to achieve its target of cutting the budget deficit to 2.8 percent of GDP by 2016.
“If growth outcomes continue to disappoint, achieving this objective will be much more difficult,” he said in his budget vote speech to Parliament.
Treasury has forecast a deficit of four percent of gross domestic product (GDP) for the current financial year, based on expected revenue collection of R993.6 billion, but economists have warned that this was based on growth projections that have failed to materialise.
Nene said the government remained committed to fiscal sustainability and that, if necessary, “further measures will be taken to achieve our objectives”.
He said the government's credit rating remained under pressure from global and domestic problems.
He called for concerted action to tackle domestic problems.
“Let's demonstrate a greater sense of urgency in the implementation of our policies, acting with speed to remove constraints to economic growth and therefore job creation,” Nene said.
“We will act decisively to avoid further downgrades, as these will result in a significantly higher cost of borrowing, both for government and state-owned companies, and the cost of financing infrastructure programmes will increase.” - Sapa