South African budget raises taxes and cuts spending
The government’s annual budget outlined a 1% increase in personal income tax and spending cuts of 25bn rand (£1.4bn; $2.2bn) over the next two years
Projected economic growth for 2015 is 2%, down from 2.5% forecast last year.
Finance Minister Nhlanhla Nene warned the economy would suffer from another three years of power disruptions.
Economic growth could even halve again down to just 1% this year if power constraints worsened.
He said state-owned power group Eskom faced a 200bn rand funding gap up to 2017.
Eskom will receive a capital injection of 23bn rand this year, to be raised through the sale of non-strategic government shareholdings in some state-owned companies.
Electricity prices will rise to finance Eskom’s rebuilding of the country’s power infrastructure.
Mr Nene said he would also introduce a temporary increase in the electricity levy, to 5.5 cents per kilowatt hour (kWh) from 3.5 cents/kWh.
Economic growth in 2014 was 1.5%, dragged down by prolonged labour strikes in the key mining sector as well as energy shortages.
South Africa’s deficit has risen to 3.9% of the economy this year rather than the 3.6% forecast.
The ratings agency Moody’s has downgraded South Africa’s sovereign debt rating in November, following similar downgrades from rival agencies Fitch and Standard & Poor’s.
Net debt has doubled since the start of the financial crisis as the country increased borrowing to try to repair the economy. Mr Nene said debt was expected to stabilise at less than 45% of GDP in three years’ time.