South Africa will seek faster deficit cut if growth allows

South Africa's Treasury would welcome a faster shift to bring down its budget deficit but the pace of the move will depend largely on economic conditions, Finance Minister Pravin Gordhan said on Tuesday. In a joint interview with the Treasury's director general Lesetja Kganyago, Gordhan told Reuters that the government would have liked to help push the rand towards a more "competitive level", although Kganyago said intervention would be too expensive.
Gordhan announced in the medium term budget released earlier in parliament that the budget deficit swelled to a record 7.6 percent of GDP in the current financial year due to a recession slashing tax revenue. The shortfall would fall gradually as the economy recovers, suggesting the government was resisting some pressure from the trade union allies of the ruling ANC to keep loose policy in place. The Treasury forecasts the shortfall at 6.2 percent of GDP in 2010/11, falling to 4.2 percent by 2012/13. "It depends on the practical realities ... if we can move faster to lower the deficit we will do so, but nobody is in a position beyond next year to anticipate what is going to happen," he said.