Cape Town - South Africa is in a welcomed economic position, the Minister of Finance Pravin Gordhan, said in his Budget Speech on Wednesday, as he unveiled a budget of R979.3 billion.
Gordhan presented a budget today which targets infrastructure development, job creation, skills upgrading, while increasing expenditure on social spending such as health, education, housing and welfare grants.
"Strong commodity prices, low interest rates and faster global growth have been the main forces behind our economic recovery," said Gordhan.
He said Gross Domestic Product (GDP) is projected at 3.4% this year, rising to 4.1% next year and 4.4% in 2013, after the economy shrunk by 1.7% in 2009.
CPI inflation is expected to rise by 5.3% this year - down from the recent high of 8.9% in 2008.
Unemployment stands at 24% -- 2.2 percentage points higher than at the end of 2008.
National government net debt is set to rise from R526 billion at the end of 2008/2009 to over R1.3 trillion in 2013/14 and the deficit of 5.3% is projected for the 2011 financial year.
"The impact of slightly slower growth in revenue and additional expenditures is that the deficit for the next year is half a percentage point of GDP higher than we projects in October," said Gordhan, who hastened to add that the deficit is expected to decline to 3.8% in 2013.
"This reduction in the deficit over the next three years is consistent with stabilising the growth in our debt and the conduct of a countercyclical fiscal policy," he said.
The 2011 Budget totals R979.3 billion - an increase of 9.1% over last year's budget.
The lion's share will go to social services, which is to be allocated R577.3 billion (an increase of 11.8%) - with R189.5 billion to be spent on education, R121.9 billion on housing, R112.6 billion on health and R146.9 billion on social protection.
An additional R39.4 billion will go to pay those in the public service, following last year's wage agreement.
Wages to civil servants have doubled in the last five years, from R156 billion to R314 billion - making up 40% of the government's consolidated non-interest expenditure.
In a media briefing before his Budget Speech Gordhan said the National Treasury was looking to move towards a better fiscal position which would enable the country to save in the good times.
He said the budget surplus in 2008 had enabled the government to continue spending during the recession.
"Where elsewhere in the world today, you have all sorts of harsh austerity, we were able to sustain government expenditure across the fronts.
"We didn't cut grants, we didn't cut pensions, we didn't cut the investments we were making in infrastructure or in education," he said.
