2-21-18 8:01 AM EST | Email Article

By Gabriele Steinhauser


JOHANNESBURG--An increase in the value-added tax as well as higher levies on fuel, alcohol and tobacco should reduce South Africa's budget deficit to 3.6% of gross domestic product in the 2018/19 fiscal year, the country's finance minister said Wednesday.

Presenting a new budget for Africa's most developed economy, Finance Minister Malusi Gigaba said he expects the deficit for the 12 months ending March 31 to come in at 4.3% of GDP, in line with its previous forecast, and drop to 3.5% of GDP by 2021.

To keep the deficit in check, the government will increase VAT to 15% from 14% starting April 1 and increase levies and duties on fuel, alcohol and tobacco as well as luxury goods and expensive properties.

"This is a tough, but hopeful budget," Mr. Gigaba said.

Mr. Gigaba said the government now believes the economy grew 1% in 2017, up from its previous 0.7% forecast, and will expand by 1.5% in 2018, 1.8% in 2019 and 2.1% in 2020.


Write to Gabriele Steinhauser at Gabriele.Steinhauser@wsj.com


(END) Dow Jones Newswires

February 21, 2018 08:01 ET (13:01 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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