Finance Minister Enoch Godongwana said the government has not run out of money and that it remained committed to prudent fiscal management.
“The government is working to manage public finances in a prudent and sustainable manner. This includes appropriately responding to the materialisation of risks including unforeseen economic and financial conditions,” Godongwana said.
He was responding to EFF MP Mzwanele Manyi, who asked in a parliamentary question whether the government had run out of money.
Manyi’s question came after the National Treasury released guidelines on cost-cutting measures following a letter sent to state institutions on August 31.
Acting director-general Ismail Momoniat instructed heads of departments to freeze hiring of new employees, freezing non-essential travel and advertising new infrastructure procurement as well as spending on catering, conferences, workshops and other services and goods not contracted, among other things.
Media reports have suggested that the government planned to increase VAT or close a number of programmes in order to continue with the R350 social relief of distress grant in April 2024.
“To be clear, the government has not run out of money. The government publishes the ‘statement of the national government’s revenue, expenditure, and borrowing’ monthly, available on the National Treasury website.
“This statement provides detailed information into government revenue collections, expenditure and borrowing,” Godongwana said.
Revenue collections for the first four months of 2023/24 have performed below expectations, he said, primarily due to under-collections in corporate income tax and higher VAT refunds.
“The main budget deficit for the first four months of 2023/24 is higher than expected,” he said.
Godongwana also said compared to the 2023 budget, the economic and revenue outlook has deteriorated and tighter financial conditions have constrained the government’s borrowing programme and led to higher borrowing costs.
“The government remains committed to prudent fiscal management and addressing these challenges to ensure the financial stability of the nation,” he said.
Meanwhile, Godongwana said municipalities were advised to reprioritise their tabled 2023 budgets to absorb the cost associated with load shedding within baselines.
He was asked by DA MP Wendy Alexander whether the National Treasury has taken any steps to assist struggling municipalities to adapt and recalibrate their budgets in light of financial losses incurred by municipalities as a result of lower electricity sales due to the rolling blackouts.
The minister said the Municipal Finance Management Act provided guidelines to municipalities on how to treat impending revenue shortfalls.
The National Treasury also provided regular budget circulars to guide municipalities to prepare annual budgets and address situations like load shedding.
“Given the fiscal constrained environment within which the national fiscus operates, the National Treasury was not in a position during the preparation of the 2022 medium term expenditure framework to make any additional funding available to municipalities for this purpose.
“As a result, they were advised to reprioritise their tabled 2023 MTREF Budgets to absorb the cost associated with load shedding within baselines,” Godongwana said.
Cape Times