South Africa's finance Minister Pravin Gordhan faces a massive shortfall in tax revenues as he presents the mid-term budget Tuesday, likely to double the estimated fiscal deficit. It will be Gordhan's first budget since he took over from the popular and charismatic Trevor Manuel who held the post for 13 years, but the mid-term version of the annual budget is not the place for policy changes.
"The big issue of course will be on the revenue side," said economist Dawie Roodt of the Efficient Group. "Revenues are currently under severe pressure because of the economic slowdown and I won't be surprised if we see about 70, maybe 80 or 90 billion rand (12 billion dollars) under budgeted estimates."
South Africa's economic outlook has worsened considerably since the February budget when growth for the year was expected to be 1.2 percent. "The biggest challenge is the fact that the economy is not growing fast enough for government to generate the tax revenues to finance development," said Tony Twine, an economist with Econometrix.
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