Darul Ihsan Islamic Services Centre

All eyes will be on Finance Minister Trevor Manuel's medium term budget policy statement to see whether government fiscal policies have changed since the ANC's Polokwane conference last December. But analysts expect that Manuel may push the budget into deficit in the next fiscal year. They believe Manuel will push the budget into deficit by increasing spending on power plants and social welfare grants to cushion a slowdown in the economy. A budget deficit occurs when an entity (often a government) spends more money than it takes in.

Analysts say that the deficit may be as much as 1% of gross domestic product in the year through March 2010, compared with a February estimate of a 0.6% surplus. Manuel has agreed to give Eskom R30 billion in the next fiscal year to avoid power outages while the global credit crisis has cut demand for exports.

Trade unions have also stepped up demand for more spending after helping elect Jacob Zuma as the head of the ANC. Analysts say except for the current turmoil on international markets which Manuel will address, he may also use the statement to reassure investors that the change in leadership in the ANC won't cause a shift in policy.

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