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Vol 55 No 5

Published 7th March 2014

South Africa

Restrained budget could be Gordhan’s last

The Finance Minister faced the challenge of keeping public sector pay down while increasing state investment in infrastructure

Pravin Gordhan confounded widespread predictions that this would be a feel-good budget aimed at assuring African National Congress victory in the May election. The Finance Minister took most observers by surprise by only increasing spending, not including debt service, by 1.9% in real terms. The budget deficit would fall to 4% of gross domestic product (GDP) in 2014/15, he predicted, then to 3.6% of GDP in 2015/16 and just 2.8% in 2016/17. This is the fifth budget of President Jacob Zuma’s first term as President and could be Gordhan’s last. There has been increasing speculation that he will step down after the polls, possibly to make way for former Reserve Bank Governor Tito Mboweni, who has just resigned as Chairman of AngloGold Ashanti.

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