South Africa’s fiscal deficit may fall below 5 percent of gross domestic product in the fiscal year that ended March 31, Finance Minister Pravin Gordhan said.
The South African Revenue Service collected 814 billion rand ($88.4 billion) of taxes in the year, more than an estimate of 810.5 billion rand, Gordhan told reporters in Pretoria today. The budget gap is estimated at 5.1 percent, down from a February projection of 5.2 percent, though it may be lower than that if the government spends less than forecast, he said.
“Getting 4 billion rand extra in the current circumstance is a remarkable achievement,” Gordhan said. “The combination of extra revenue and some areas of underspending is likely to take our deficit below 5 percent.”
Gordhan has been forced to scale back his revenue projections as mining strikes and a drop in demand from Europe cut exports, curbing growth in Africa’s biggest economy. The government plans to narrow the budget gap to 3.1 percent of GDP in the fiscal year ending in March 2016 from an estimated 4.6 percent this year.
South Africa plans to cut spending for the next three years as it faces downgrades from Standard & Poors and Moody’s Investors Service. Elections next year will put pressure on President Jacob Zuma to raise social spending, limiting Gordhan’s ability to tighten the gap quickly enough, according to S&P and Moody’s.
The rand fell 0.2 percent to 9.2087 against the dollar as of 3 p.m. in Johannesburg, taking its decline this year to 8 percent.