Executive Summary

• Our monthly fiscal tracker looks at the monthly budget figures adjacent to the historical seasonal trends. We dissect the performances of the revenue and expenditure categories and estimate a budget balance, based on the divergence of the actual performances from the seasonal run rate.

• The finalisation of FY17/18 budget data has brought about the closure of what was a tumultuous year from a budget perspective. Total revenues ended the year R3.6 billion higher than the February Budget Review estimates, while expenditures were R7.2 billion below estimates.

• The month of March is typically a deficit month – we expected some front-loaded spending by consumers to take place due to the VAT hike coming into effect in April, but this was not the case, or at least did not show up in VAT revenue. Total VAT collection remained more or less in-line with seasonal trends. The upside surprises came from higher custom duties. As a result, the monthly budget deficit was much narrower than our forecast, coming out at R6.5 billion, compared to the R12 billion we had initially forecasted and the R14 billion needed to achieve the Budget Review estimates.

• The full year main budget deficit was R209.4 billion, or 4.5% of GDP, compared to R217.3 billion, or 4.6% of GDP, forecasted in the February Budget review. Expenditures did most of the heavy-lifting to yield a narrower budget deficit in 2017/18 compared to revenue collection which remained constrained by low confidence, SARS inefficiencies and subdued consumption.