Treasury seeks to cut budget spending as debt climbs

The South African National Treasury has been speaking to all government departments to prepare proposals on how they can reduce their budgets but still not affect service delivery, the Treasury said: “it’s seeking cuts of 5% for 2020-21, and 6% and 7% for the next two years”.

After the treasury gave Eskom an additional R59 billion bailout, it was projected that the fiscal budget will have a deficit of about 2%, Finance Minister Tito Mboweni in February talked about reducing the government’s salary bill by about R25bn over three years, this will be done by encouraging early retirement through handsome severance packages.

Jackson Mthembu, the minister in the presidency said “Treasury hasn’t briefed the cabinet on proposed spending cuts” adding that “Mboweni would soon present a holistic paper on the economy”

Moody’s said “We expect the South African government to try to absorb the extra Eskom support costs with new revenue or expenditure measures in the next mid-year budget exercise, with departmental budget cuts being one option,”