CAPE TOWN, The South African government's gross borrowing requirement is expected to reach 243.3 billion Rand (about 18.56 billion US dollars) in 2016/17, the National Treasury says.

"In 2016/17, the budget deficit amounts to an estimated R170.5 billion. Debt repayments amount to R72.9 billion, bringing the total borrowing requirement to R243.4 billion," according to the Treasury's 2017 Budget Review which was issued in conjunction with the presentation of the 2017 Budget by Finance Minister Pravin Gordhan in Parliament here Wednesday.

The R243.4 billion borrowing requirement is R13.9 billion higher than the amount projected in the 2016 Budget.

During the first half of last year, borrowing remained within projected levels but in September 2016, the government increased Treasury Bill issuance in anticipation of a higher budget deficit and to cover short-term cash flow pressures expected in December 2016 and January 2017.

The Budget Review says the government cannot always balance its budget through tax increases and spending cuts. In 2017/18, the gross borrowing requirement will be R220.9 billion, as the government also expects to borrow R21.2 billion to increase its cash reserves to meet future commitments.

Th Treasury says the gross borrowing requirement is projected to increase from R220.9 billion in 2017/18 to R284.4 billion in 2019/20. The main budget deficit constitutes the bulk of this requirement.

Debt redemptions of R54 billion are expected in 2017/18, increasing to R104 billion in 2019/20, mainly as a result of large foreign loan redemptions, said the Budget Review.

Most of this requirement will be met by domestic long-term bond issuance, which will increase gradually to R197 billion in the outer year of the three-year period. The value of short term issuance will remain broadly stable over the three-year period.