1. A Macroeconomic Perspective
The 2003 Budget
A Macroeconomic Perspective

2. Macroeconomic aspects of Budget 2003
1-) Normalization of the forex market is the key 2-) Focus on redistribution is critical for the credibility of the macro-fiscal framework 3-) Acceleration in government capex enhances economic growth 4-) Shifting mix of PSBR reduces pressure on local capital markets. 5-) Policy consistency and confidence building support macroeconomic stability.

3. Exchange controls going … Prudential measures are coming….
Gradual approach reiterated
Institutional investors encouraged to gear up for the new dispensation.
South African companies offshore investment may rise.
Tax amnesty for individuals a key measure to normalize the business environment
Unblocking the Blocked Rand is a sign of rising confidence in economic resilience

4. Focus on redistribution- going beyond stabilization
Further tax relief, mainly for lower income groups Spread of Relief
Income Group Share of Tax Relief
R0 – R %
R – R %
R and above 21%
Increase in social assistance (disability and child support) grants
Increased funding for land restitution – R1.9bn
R10bn to advance black economic empowerment

5. Average tax rates for taxpayers under 65
Taxable income
2002 rates
Proposed rates
Tax reduction
R30 000
540 -
R40 000
2 340
1 800
R50 000
4 840
3 600
1 240 R
18 340
14 700
3 640 R
53 740
47 800
5 940 R
6 240

6. Government debt as a % of GDP
Changing mix leads to crowding in of private sector
RSA total gross government debt

7. Promoting national savings
Tax rate on retirement funds reduced from 25% to 18%
Interest income exemption increased

8. Enhancing growth via accelerated infrastructure investment
Capital expenditures and transfers by national departments have grown by 28.1% a year since 1999/00….
Budgeted to grow by 10.9% over next 3 years
Public/private partnerships of growing importance: 50 projects registered, 6 concluded,6 to be finalised this year
Also projects associated with core spatial development projects: Coega, industrial development zones, rapid rail transit facility in Gauteng

9. Further growth enhancing measures
Tax incentives for urban renewal
Tax incentives for small business development – turnover limit for lower taxes upped to R5m
Privatisation proceeds to boost revenue

10. Concluding remarks

11. Concluding Remarks
The 2003 Budget represents rising confidence in the economy.
Global conditions have given South Africa a break, a golden window of opportunity.
The remaining risks are on the social targeting and operational efficeincy side of the Budget, it is all linked to low efficacy of fiscal spending.
As the business sector gains confidence in our new dispensation, the economy gains resilience accordingly.

12. The End
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