With the national treasury reportedly depleted, the National Treasury is proposing a number of extreme measures to force the country’s ministries and other government sectors to cut spending.
Ministry of Finance This week’s data The budget deficit in July hit R143.8 billion, the biggest since at least 2004 and exceeded economists’ expectations of R115.5 billion.
Economists also Sounding the alarm over the full-year outlookSouth Africa’s budget deficit this year is expected to be somewhat higher than the budget set by Finance Minister Enoch Godongwana.
South Africa’s budget deficit in 2023 is expected to be between 6% and 6.5% of gross domestic product (GDP), significantly higher than the minister’s forecast of 4%.
Finance Minister Enoch Godongwana said in the Budget that the government wants to stabilize South Africa’s debt levels at 70% of GDP, but they have already risen to 72%.
As a result, South Africa’s debt situation has also deteriorated significantly, from a relatively modest R500 billion in 2006 to over R4.7 trillion in 2022. This is expected to reach R6 trillion by 2025, putting the country in a serious debt trap.
Similar warnings have been issued by the South African Reserve Bank. raised a red flag This week’s topic is the expansion of the country’s budget deficit.
According to the Sunday TimesPrime Minister Godongwana is acutely aware of the fiscal challenges facing the country, and in a draft document seeking solutions, he calls for significant spending cuts, a moratorium on advertising for new hires, and alternative means for ministries to fund wage increases. It suggests things like doing so.
The austerity measures are the first official stance taken by the National Treasury since 2013, and are particularly noteworthy as national elections are about to take place.
The document also reportedly noted that tax revenues were significantly lower than expected, further worsening the funding shortfall.
It also recommended that similar measures be introduced in local areas.
South Africa’s state and local governments are in deep financial crisis, with major metros already running out of money. Many others are nearing collapse..
The City of Tshwane is tackling a pay battle head on with city workers. Threat of being taken into custody It’s looming over your head now.
Other metro lines, such as Joburg and Ekurhuleni, have struggled to replace parts and repair urban infrastructure, with the latter announcing this week that repairs to traffic lights would have to be halted and replaced with stop signs instead. . I ran out of funds for repairs.
The financial stress on local authorities is well known, with one of the most obvious indicators being the high levels of local government debt to power utility Eskom, which has soared to R64 billion.
The Sunday Times said the measures could come into effect as early as mid-September and last as long as necessary to rein in the budget.
Read: Every South African “owes” R70,000 – thanks to the government