Carol Paton Writer at Large
Finance minister Tito Mboweni. Picture: ESA ALEXANDER
Finance minister Tito Mboweni. Picture: ESA ALEXANDER

The parliamentary budget office, which provides independent advice to parliament’s finance and appropriations committee, said on Tuesday that it expects the Treasury to miss its fiscal consolidation target for the year, with a budget deficit of 4% of GDP.

The estimate is in line with broader expectations with credit ratings agency Moody’s, for example, reporting last week that it expected a deficit of 4% against the Treasury’s estimate in February of 3.6%.

The estimates come ahead of the tabling of the medium-term budget policy statement (MTBPS) on Wednesday, by new finance minister Tito Mboweni.

Lower-than-expected economic growth is viewed as the key reason for the anticipated fiscal slippage. The office did not make a projection beyond next February.

Moody’s has said that it expects the Treasury to bring the deficit down to 3.5% by 2021.

Despite lower-than-anticipated growth for 2018 — most economists have penciled in a growth rate of between 0.7% and 0.9% against the Treasury’s February estimate of 1.5%. The parliamentary budget office says that 2019-2020 revenue collection is broadly on track.

Said Rashaad Amra, the office’s economic analyst, “We are in a much better position now than we were last year when, in October, we anticipated a R40bn shortfall. Now, we anticipate only a R2bn revenue shortfall.”

Correction October 23 2018

This article was corrected to reflect that the fiscal deficit is estimated for the 2019-2020 year and not 2018-2019 year as previously published