By Infrastructure development continues to be a key thrust of the government’s spending plans, with a projected R787 billion earmarked to expand and spruce up bus transit systems, freeway improvements, electricity and water systems, and rail projects in the medium term.

But finance minister Trevor Manuel noted in his budget speech yesterday that South Africa was fortunate that it was “already shovelling” rather than just “shovel ready”.

The infrastructure programme, for which spending rose from about R700 billion in the last budget, remains the key element of the fiscal stimulus package. Manuel noted that the stimulus was not based on borrowing to rescue failed banks, as in the US, but on constructing “the roads and the power stations, the classrooms and hospital wards, to modernise technology and transform public service delivery as the foundations of growth and broad-based development in the decades ahead”.

He noted that roads, airports “and our railway stations” had become construction sites, “as millions of inconvenienced commuters experience daily”.

The revised estimate of expenditure on infrastructure in 2008/09 was R190 billion, or 8.3 percent of gross domestic product (GDP). This was about R30 billion higher than the figure in last year’s budget, which would have been just short of 7 percent of GDP. In 2009/10 spending will rise to a projected R237 billion, roughly 9.6 percent of GDP. It is projected to rise in 2010/11 to R260 billion, or 9.7 percent of GDP; and to R290 billion, or 9.8 percent, in 2011/12.

GDP is expected to be about R2.4 trillion in 2009/10.

For this fiscal year, the bulk of infrastructure spending will be by public enterprises: a total of R120 billion, compared with R99 billion in the 2008 budget. R50 billion will be spent by municipalities, up from R34 billion; and nearly R40 billion by provincial departments, from R42 billion). National departments will spend about R8 billion, up from R7.5 billion.

Manuel noted that the construction of new commuter rail facilities, the Gauteng freeway network, and improvements in electricity through Eskom were financed outside the main budget. Thus, the public sector borrowing requirement for the next year was expected to be 7.5 percent of GDP, or at least R186 billion, “to be raised from domestic institutions, investors, multilateral institutions and portfolio inflows from abroad”.

Eskom is to get assistance with the second tranche of a R60 billion loan – R30 billion this year and a third tranche of R20 billion in 2010 – and an unallocated contingency reserve of R6 billion.

Manuel said housing and eradicating informal settlements remained at the forefront of infrastructure investment plans. In the past three years, infrastructure grants to municipalities totalled R67 billion. A further R45 billion would be spent on the “breaking new ground” housing programme.