Provincial spending train gathers speed
THERE is mounting evidence that the government will not be able to maintain its budgeted deficit before borrowing of 4% of GDP in the current fiscal year.
Following the release of state spending and revenue figures this week, Standard Bank predicted the deficit was likely to pushed to 4.5% amid huge provincial spending overruns.
For the seven months to end-October, government spending was up 10% to R109-billion on the same period last year while income from taxes and duties was 8.4% higher at R90.3-billion. For the entire 1997/98 fiscal year, the government had budgeted for 6.1% for spending increases and 11.1% for revenue increases.
In a report released on Friday, Standard Bank warned that revenue could fall short of budgeted targets as economic growth was likely to be below the assumed 2.5%.
The accumulated deficit before borrowing in the seven months to October was R18.7-billion - already comprising 75% of the budgeted R24.8-billion. This has raised concerns that budgeted targets will not be met.
The Cabinet this week said it would tackle the overspending by provinces, which according to some estimates could be more than 10% ahead of the budgeted R80.8-billion allocation. The Eastern Cape, Western Cape, Gauteng and KwaZulu-Natal are the worst culprits, with estimate overruns of R2.7-billion, R1.1-billion, R1.4-billion and R2-billion respectively. The government is also concerned about the R3.6-billion in debts owed to commercial banks by SA's local authorities.