SA budget targets energy crisis

Finance Minister Trevor Manuel raised social spending

South Africa's finance minister has pledged more funds in his latest budget to ease the nation's energy crisis.

Trevor Manuel said state-owned Eskom would get 60bn rand ($7.6bn, £3.9bn) over the next five years to tackle the power cuts that have hit the economy.

The minister also cut the corporate tax rate to 28% and increased social spending, but still predicted a budget surplus of 18bn rand for the year.

He forecast growth of 4% in 2008, down from the 4.5% estimate made in October.

'Stronger ship'

Mr Manuel said the economy was in robust shape, despite problems elsewhere in the world.

"As we present a picture of where we are now, we must also tell South Africans and the world that our ship is stronger and we are better prepared than during previous episodes of global turmoil," he said.

"It is time for neither gloom nor panic. But the course ahead would be somewhat tougher."

The budget provides more money for social programmes. Spending on health services, including programs to fight HIV/Aids, will rise 10% over the next three years.

An additional 10bn rand will be spent on tackling crime, while 90bn rand extra has been allocated to fight chronic poverty.

Positive budget

Despite that extra spending, economists say it is a prudent budget.

"It's a surprisingly and overwhelmingly positive budget. If you look at the growth forecast, that hasn't been downgraded too much, and South Africa is looking at a larger fiscal surplus," said Razia Khan, the African Economist at Standard Chartered.

Other analysts hope the extra money will be used wisely.

"In general, given the cyclical nature, they did a good job," said Fanie Joubert, an economist at Efficient Group.

"There's enough money, but how is it going to be spent?"