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What will Manuel do with his R14bn?

HELMO PREUSS | CAPE TOWN, SOUTH AFRICA - Feb 22 2005 16:49
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Higher-than-expected government revenue growth means Minister of Finance Trevor Manuel has R14-billion to allocate when he announces the 2005/06 Budget on Wednesday, Old Mutual Asset Managers (Omam) economist Rian le Roux told a media briefing on Tuesday.

"I expect him to allocate R5-billion to offset fiscal drag, a further R5-billion for deficit reduction, R3-billion on extra government spending and R1-billion for tax incentives.

"He can obviously play around with these numbers, but I hope he does not further stimulate the economy by reducing the personal income-tax rate. He could usefully eliminate the secondary tax on companies, as that is seen as complicated by foreigners, but I am not sure he can eliminate it at one go," Le Roux stated.

Le Roux said the overall thrust of the Budget is to be growth friendly, and that will be achieved by a three-pronged focus of social delivery, support for jobs and the maintenance of fiscal discipline.

He is optimistic that the strong rand will allow the South African Reserve Bank to cut interest rates in April, especially if the Budget does not provide much in the way of a fiscal stimulus to private consumption, but rather focuses on reducing transport bottlenecks and other costs of doing business. -- I-Net Bridge

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