FINANCE Minister Pravin Gordhan’s budget balancing act on Wednesday included increases in the fuel levy and excise duty on tobacco and liquor products to raise sufficient revenue to reduce the budget deficit.

Under intense pressure from the international community and the rating agencies to exercise fiscal restraint, Mr Gordhan was able to predict a fall in the deficit from R157.9bn in 2015-16 to R123.6bn in 2018-19.

The fuel levy increases by 30c/l while so-called sin taxes remain largely unchanged in real terms with increases mostly equal to the 6.8% inflation rate. These increases will raise about R9.5bn.

Mr Gordhan told the National Assembly that the government had responded to new spending needs without pushing up expenditure. "An amount of R31.8bn has been reprioritised over the medium-term expenditure framework (MTEF) period to support higher education, the New Development Bank and other priorities," Mr Gordhan said.

He announced further that the government would spend R238bn on economic affairs and agriculture, R181.5bn on defence and public safety, R73.7bn on general administration, R297bn on education, R168bn on health and R167.5bn on social protection. This in a budget that provides for expenditure of R1.46-trillion.

The government made spending cuts of R10bn in the 2015-16 financial year and plans to cut spending by a further R15bn in the 2016-17 financial year followed by a cut of R15bn the following year.

Budget documents said the 2016 budget proposals would return the public finances to a sustainable path. "The budget sets out tax increases and spending reductions to narrow the fiscal deficit and stabilise the growth of public debt, while protecting core social and economic programmes."

The increases in excise duty means that the consumer will pay 11c more for a can of beer, 18c more for a bottle of wine, R3.94 more for a bottle of spirits, and 82c more for a packet of cigarettes.