City Press reports that the stern warning of National Treasury’s director-general, Dondo Mogajane is that SA’s finances are in serious trouble, and the best way to plug the gaping hole in the fiscus may be for all state employees to take a 10% cut in salaries and wages.
He said last week that the government had a R120 billion gap to plug as a result of having to accommodate a R59 billion Eskom bailout as well as an expected significant shortfall in tax revenue for the fiscal year ending March 2020. Although revenue collection amounted to R175.8 billion in the first two months of the tax year – up by 6.8%, compared with the same period last year – this increase rate was not nearly enough. Mogajane observed: “National Treasury’s box is empty. Growth is not coming through and tax revenues are not there. We are in trouble. The government needs to reduce spending.” Eskom’s dire situation has forced the state to hugely overshoot its financial support package. Mogajane observed that government could plug the huge fiscal gap in two ways: by entering into negotiations with public sector trade unions to cut wages, and by reallocating existing budgeted expenditure. Mugwena Maluleke of the SA Democratic Teachers’ Union said such a move would “be met with workers’ might”. Tahir Maepa of the Public Servants Association said that while they were willing to assist government to get out of “this self-inflicted tragedy”, it would not let workers “be the burden bearers of wrong and reckless political and economic decisions”. Richard Mamabolo of the Police and Prisons Civil Rights Union echoed this sentiment, saying it would be wrong to penalise public servants.
- Read the full original of the comprehensive report by Justin Brown and Lesetja Malope on the above at City Press
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