The package of tax measures that have been introduced in the 2016 Budget has also spread the additional tax burden over several revenue sources so as to limit the adverse short-term impact on growth. As a ratio of GDP, the deficit of national government is projected to narrow from 4,2 percent in the 2015/16 fiscal year to 2,9 percent by fiscal 2018/19.
It is noteworthy that the budget sets out a more rapid adjustment path than what was envisaged in the 2015 Medium Term Budget Policy Statement in October last year. These projected outcomes are commendable in the current circumstances, and if implemented effectively, will contribute to dampening inflationary pressures and impact favourably on investor confidence and South Africa’s credit rating metrics.