(Adds social spending as percentage of budget)
By Wendell Roelf
CAPE TOWN, Oct 21 (Reuters) - Women wait for hours at the crowded social security office in South Africa's Gugulethu township for tiny child support grants that often make the difference between subsistence survival and starvation.
But their pleas for higher payouts are unlikely to sway Finance Minister Pravin Gordhan when he announces his midterm budget on Wednesday.
Instead, with revenue under pressure as economic growth stumbles in the wake of the 2009 recession, he is expected to keep a rein on spending and thereby pacify ratings agencies worried about profligacy before elections next year.
Gordhan will probably also widen his budget deficit forecast for fiscal 2013/14 to 4.9 percent of economic output from the 4.6 percent seen in February, a Reuters poll of 15 economists found. For a table, click on
That means poor South Africans such as Anna Mara, a 43-year-old who gets 300 rand ($31) a month for each of her three children, will have to keep a close eye on their outlays to stretch meagre government grants as far as possible.
"It is better than nothing, but we are struggling to cope," said Mara.
"Bread costs 10 rand a loaf, electricity is expensive, and 50 rand doesn't even last a week. Transport to school for the children is also high," she told Reuters above the din of wailing infants in the social security office.
Two decades since the end of apartheid rule, millions of people - most them black - still live in shantytown squalor, with the government extending grants to the most vulnerable, including children, the elderly and disabled.
But with gross domestic product growth expected to be an anaemic 2 percent this year, pouring billions of rand into social welfare is costing Africa's biggest economy dearly as it grapples with chronic budget gaps.
"On the basis of how much is being borrowed at the moment to fund amongst other things social grants, one could call it bordering on the unsustainable unless we start to generate more tax revenues," said ETM economist George Glynos.
SOCIAL GRANTS TO RISE
More than a quarter of South Africa's 52 million people receives grants, and payouts are expected to reach 113 billion rand ($11.5 billion) in the 2013/14 financial year, 10 percent of the total budget.
This is likely to rise to 130 billion rand in three years when the government is expected to disburse an estimated 17.2 million grants, up from 15.2 million last year.
However, Gordhan dares not cut social spending, especially as his African National Congress prepares for elections next year. Even the ANC is almost certain to win, its overwhelming parliamentary majority may be reduced.
"Once you have offered grants to the poor and they are expecting it and have structured their lives around it, it becomes very difficult for the government to scale back," Glynos said.
Tensions already run high in teeming black townships where residents sporadically loot and burn shops in anger over a lack of adequate housing, electricity and sanitation. The overt materialism of the ruling elite stokes the anger further.
But yielding to any internal pressure to fund social largesse would only antagonise investors and ratings agencies who have downgraded South Africa's credit rating over the past year, spooked by often violent strikes in the mining sector.
"South Africa is still at risk of a rating downgrade and as such needs to exert great caution in fiscal expenditure," said Investec economist Annabel Bishop. Gordhan needs to find some way of cutting costs, she said.
"This is difficult in a pre-election year. But the rapid escalation in public sector salary and wages would be a good place to start."
Gordhan could draw some reassurance from history, which shows that while tightening spending could cost the ANC a few votes, it faces little danger of defeat by the main opposition Democratic Alliance, which is still regarded by many blacks as the party of white privilege.
"We've never seen much in the way of a pre-election burst of spending on the part of the government," said Peter Worthington, an economist at Absa Capital. "This is partly because everybody knows the ANC is going to win the elections regardless." ($1 = 9.8174 South African rand) (Additional reporting by Stella Mapenzauswa; Editing by Ed Cropley and Mark Heinrich)