South Africa’s finance minister Pravin Gordhan unveiled a budget filled with spending cuts and tax increases as he battles a weak economy and predictions that Africa’s biggest economy will suffer slow growth and a swelling of its budget deficit.
Gordhman told the South African parliament that the economy will only post modest growth of 2.7% in 2013 and that the government’s budget deficit widened to 5.2% as ‘enormous’ challenges face the country.
The economy’s poor performance last year combined with turmoil in the nations mining sector dragged don tax revenues and forced the budget deficit wider. South Africa’ mining sector was crippled by a wave of violent strikes that saw the worst violence since the end of apartheid.
“South Africa’s economic outlook is improving but it requires that we take a different trajectory to move it forward, All of you must pay a little more tax thank you very much” Gordhan said during his address to parliament. He admitted that; “The growth outlook for the next three years has weakened, and government’s net debt is now expected to stabilise marginally higher than 40 per cent of” gross domestic product.”
To cover the deficit Gordhan said that he would have to make cuts but revealed that he still planned to spend on new infrastructure and work programmes for the young.
The finance minister also announced that he would lead a review of the nation’s tax policies, including the taxes paid by the mining companies.
“We need to get mines to start mining, and ensure they make their fair contribution to the economy,” Mr. Gordhan said. He didn’t elaborate on what new taxes or tax codes mining companies might face.
After the budget the Rand fell against the Dollar of its peers as worries grew that the three major credit ratings agencies could make further cuts to South Africa’s BBB+ rating.
Current ZAR Exchange Rates
The South African Rand to Euro exchange rate is currently trading at 0.0863
The South African Rand to US Dollar exchange rate is currently trading at 0.1128
The South African Rand to Pound Sterling exchange rate is currently trading at 0.0747
The South African Rand to Australian Dollar exchange rate is currently trading at 0.1108
The South African Rand to New Zealand Dollar exchange rate is currently trading at 0.1371
The South African Rand to Canadian Dollar exchange rate is currently trading at 0.1159
These exchange rates were correct as of 15:55 pm GMT
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