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<\/a><\/p>\n\u201cThere are some expectations that South Africa\u2019s budget this month will see positive developments on fiscal consolidation,\u201d said Annabel Bishop, Johannesburg-based chief economist at Investec Bank, in a note to clients.<\/p>\n
\u201cThere is also marked room for disappointment as the borrowing trajectory is extremely high, and unlikely to be cut.\u201d<\/p>\n
Tax revenue for the first nine months of the fiscal year was 10.6% lower than in the same period in the previous year, but better than the 17.9% shortfall predicted for the full year in October\u2019s medium-term budget policy statement.<\/p>\n
Rashaad Tayob, a money manager at Abax Investments Ltd in Cape Town said with revenue better than expected, it could be feasible to reduce issuance at the weekly nominal and inflation-linked bond auctions by as much as R2 billion\u00a0 ($134 million), from R8.6 billion currently.<\/p>\n
The Treasury said this week it won\u2019t cut the amount in the current fiscal year.<\/p>\n
Maintaining the current issuance of bonds would mean banks and pension funds would find it difficult to absorb it all, keeping the yield curve steep, Tayob said. Still, the Treasury may want to keep funding levels high.<\/p>\n
\u201cI understand if Treasury doesn\u2019t see the point of cutting it down,\u201d Tayob said. \u201cThey would rather overfund given the difficult economic environment and the potential for continued high budget deficits in the coming years.\u201d<\/p>\n
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