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Fin24 reports that Treasury has informed all government departments that they will face budget cuts across the board in 2024, and no new spending will be allocated.
They have also been told to fund the 7.5% wage increase for public servants from their existing budgets for 2023/24 and the following two years. The wage increase has led to a R35.7 billion shortfall across government. The budget cuts come on top of spending reductions already written into the expenditure framework that saw education and health budgets – which are usually protected at all costs – to shrink in real terms. Noting that the government faced a triple whammy of lower-than-expected growth, falling revenue, and a rising cost of borrowing, head of the budget office, Edgar Sishi, said: “Our approach is that everything must be on the table to make sure the public finances are in a healthy state.” He added that the environment for borrowing, which included elevated interest rates and political risk, had not improved. Revenue numbers at the end of the first quarter showed the corporate tax take to be 22% lower than at the same time last year. The revenue numbers have prompted economists to project that Treasury will not meet its target of a 3.9% budget deficit before borrowing in the 2023/24 financial year. Sishi said that efforts to strengthen the fiscal framework “includes working with stakeholders in government in the budget process to find savings.”
- Read the full original of the report in the above regard by Carol Paton at Fin24 (subscriber access only)
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