South African finance minister plans to spend more for development

South African Treasury Minister Trevor Manuel unveiled plans Tuesday to boost government spending by 78.3 billion rands (US$12 billion) over the next three years to try to promote growth and create jobs. Revenues for 2005-6 were expected to be 30 billion rands (US$4.6 billion, Ђ4 billion) more than earlier projections, in part because the government has grown better at collecting taxes.

The extra revenue and a favorable financial environment had enabled the government to propose an "expansive" budget framework - 78.3 billion more over the next three years than originally budgeted. Government spending on road, rail, and ports infrastructure will increase markedly in 2006 and beyond, Manuel said. He announced big increases in spending for the police, prisons and courts, as well as for housing, the AP reports.

The Treasury said South Africa's economy is likely to grow by 4.4 percent this year and average annual growth of around 4.4 percent through 2008. But the government has set a growth target of 6 percent, saying this is necessary to dent the country's unemployment rate, officially 27 percent but believed to be much higher because of the number of people in the informal sector and no longer looking for work.

Inflation reached a low point of 3.1 percent in February this year, but increased to 4.8 percent in August, mainly because of the marked rise in oil prices this year. Inflation expectations remain moderate.

Manuel told parliament that total spending would increase from an estimate of 415.8 billion rands (US$63 billion, Ђ53 billion) in 2005-6 to 474 billion rands (US$72 billion, Ђ60 billion) in 2006-7 to 569 billion rands (US$86 billion, Ђ72 billion) in 2008-9. A.M.

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