The National Treasury recorded a fiscal deficit in November of -10.6 billion rand, with a general decline in the fiscal health of the country being read into these latest figures by analysts.

Government's assistance with regard to financing infrastructural development programmes (due to lack of sufficient funding on the part of parastatal organisations) is likely to result in the expansion of the fiscal deficit in coming years.

This is not such a negative potential development, as the borrowing will fund projects that will yield returns over a long period of time.

For the first eight months of this fiscal year, the Treasury has collected 57.9% of the budgeted revenue and spent 63.5% of budgeted expenditure for 2007-2008 fiscal year to date.

Government expenditure overtook revenue once again in November, increasing by 16.9% year-on-year to R51.82 billion rand, up from the 45.11 billion collected in November the previous year.

On the revenue front, government revenue increased in November, however it rose significantly lower than expenditure during this month, by a mere 1.8% year-on-year to 41.26 billion rand from the 40.54 billion collected in November the previous year.

The cumulative year-to-date expenditure (for 2008-2009) is currently at R363.1 billion compared to R332.54 billion during the same period for 2007-2008.

A breakdown of the revenue collections figures indicates that the increase in revenue in November was led by positive year-on-year growth in personal income tax, which increased by 14.0% to R14.2 billion in November from 12.4 billion in October, while growth in VAT receipts increased marginally by 1.7% to R14.6 billion in November 2008 from R14.3 billion in November 2007.

On the other hand, company tax collection fell sharply by -18.9% to 1.8 billion rand from 2.2 billion in November 2007. This is a reflection of the slowdown in economic activity and the decline in consumer spending.

The significant growth in expenditure over the past couple of months has led to the total budget being in significant deficit territory.

As it stands, the total budget is currently in deficit territory of -40.2 billion rand for the first eight months of the fiscal year, significantly higher than the -17.2 billion in the same period in 2007.

Although the November revenue figures showed an increase, the fact that it only rose by a small margin suggests that the slump in real economic activity is likely to weigh down heavily on the growth of tax revenues in the months ahead.

In particular, November witnessed substantially negative growth in revenue from company tax collections, namely -18.9% year-on-year.

In the case of the domestic economic downturn gathering momentum, a substantial shortfall in the revenue collection is expected and an associated large widening of the fiscal deficit.

Government revenue November Year-to-date Revenue Fiscal 20082009 R41.26bn R363.10 billion
Fiscal 2007-2008 R40.54 billion R332.54 billion.

Government expenditure November Year-to-date Expenditure Fiscal 2008-2009 R51.82 billion R403.259 billion Fiscal 2007-2008 R45.11 billion R349.774 billion.

Surplus/deficit November Year-to-date Surplus/Deficit Fiscal 2008-202009 (R10.60 billion) (R40.20 billion) Fiscal 2007-2008 (R4.57 billion) (R17.23 billion).

Source: I-Net Bridge