South Africa's budget moved back into deficit in 2008/09 as it ramped up spending to counter the effects of its first recession in almost two decades, after a few years of small budget surpluses. The economy exited the recession in the third quarter of 2009 but tax revenue is expected to lag the recovery. As the economy recovers, revenue should rise to 27.3 percent of GDP in 2010/11, from 26.8 percent in 2009/10. "Now that the economy is growing again, government will gradually reduce the deficit and moderate public debt so that fiscal policy can continue to play a supportive and developmental role," the Treasury said. The budget deficit for 2009/10 is estimated at 7.3 percent of gross domestic product, lower than the Reuters median consensus of 7.8 percent.
The shortfall is seen narrowing to 6.2 percent in 2010/11 and 4.1 percent by 2012/13.
The National Treasury said in its 2010 Budget Review government expenditure will moderate to 33.6 percent of GDP in 2010/11 from an estimated 34.1 percent of GDP in 2009/10. Due to the recession, government revenue was 73.7 billion rand short of the targeted 731.2 billion rand for 2009/10. The Treasury expects to collect 738.4 billion rand in the next financial year.
