South Africa’s budget balance moved into a deficit four months into the fiscal year. The main reason was a seasonal increase in government spending. Government revenue also increased, but was not able to keep up with the higher spending. The budget deficit after the first four months of the fiscal year is not unusual and has been the case during previous years (see graph). However, there is already pressure building on the 2008/09 budget as a result of government assistance to Eskom, wage increases to public sector workers and slowing tax revenue growth due to a weakening economy.