South Africa says revised budget will keep focus on stabilising debt
PRETORIA (Reuters) -South Africa’s finance ministry said on Wednesday that a new budget would be presented on May 21 which would maintain the government’s focus on stabilising public debt.
Africa’s biggest economy will adjust revenue and spending projections and growth forecasts after scrapping a contentious increase in value added tax that exposed deep rifts in the coalition government.
Finance Minister Enoch Godongwana said there would be thorough consultations with all political parties in the coalition before the revised budget is tabled in parliament, adding that fiscal consolidation was still in place.
His ministry issued a statement saying that debt stabilisation was "a crucial element in strengthening our public finances".
Months of political wrangling over this year’s budget has caused investor unease, hurting the rand currency.
The budget was postponed in February because of disagreements in the coalition over a plan to increase VAT from 15% to 17%.
A revised version in March proposed raising VAT by 1 percentage point over two years, but that plan was also deeply unpopular.
The Democratic Alliance, the second-biggest party in the Government of National Unity coalition, took the budget to court before agreeing an out-of-court settlement with the finance minister.
"We are in a coalition government and we have to do things differently," he said.
