Column : Meeting the 5.3% deficit target
Moving on to subsidies, the government had pegged the total subsidy outlay at R1,900 billion. However, as is now well known, the FY13 outlay of R436 billion on fuel subsidies has been utilised to the tune of R385 billion as payment of FY12 dues. Given current oil prices, losses being made by oil companies are estimated at R1,670 billion. Similar to past trends, our base case assumes the governments share at 60% (i.e R1,000 billion) and a 50% deferral to FY14 (R500 billion). The deficit could be lower if the government changes the subsidy-sharing mechanism and/or defers a higher amount for FY14.
As regards revenues, while tax collections have picked up in the last quarter, on a cumulative basis, collections are well below budget estimates. We have factored in a slippage of R300 billion on tax collections as the budget estimates are based on real GDP growth of 7.6% whereas latest government data pegs growth at 5%. While tax collections are likely to come in below budget estimates, market-based revenue items, i.e. non-tax revenues as well as divestment proceeds, could come close to targets.
On divestments, including
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