Finance Minister Malusi Gigaba delivered his maiden medium term budget policy statement in Parliament on Wednesday.

The statement sets out government spending priorities for the next three years.

The highlights included:

— South Africa slashing its projected GDP growth forecast for 2017 by almost half, from 1.3 percent forecast in the February budget to 0.7 percent;

— Revisons to the 2017 growth forecast reflected a significant deterioration in business and consumer confidence over the past year;

— South Africa’s public debt service costs would rise steadily to consume 15 percent of the country’s main budget revenue by 2020/21;

— South Africa’s tax revenue was expected to fall far short of budget projections at R50.8 billion – the largest shortfall in revenue collection since the 2009 recession;

— Treasury estimated stabilising gross debt below 60 per cent of GDP over the coming decade would require spending cuts or tax hikes amounting to 0.8 per cent of GDP (amounting to R40 bln);

— South Africa’s budget deficit was expected to widen to 4.3 percent of GDP in the next financial year due to tax revenue shortfalls, weak growth and measures to shore up struggling state-owned enterprises;

— South African Airways would receive a further R4.8 billion from the state’s coffers in the current financial year with the money coming in part from the disposal of a portion of the state’s Telkom shares;

— South Africa’s contingency reserve would be cut down to R16 billion over the next three financial years (R3 billion for 2017/18, R5bln tin 2019/20 and R8 bln in 2020/21) to offset revenue shortfalls;

–Major funding shortfalls were expected, preventing government from fully covering students studying at universities; and

–Legislation was being drafted to provide a legal framework to establish a National Health Insurance fund.

Details of the budget policy proposal would be announced in the main budget in February next year.

– African News Agency