The government’s prudent fiscal management and austerity measures have come under criticism from the SACP and South African Federation of Trade Unions (Saftu).
This happened as Finance Minister Enoch Godongwana insisted that the government had not run out of money, but remained committed to prudent fiscal management.
“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.
In August, the National Treasury released guidelines on cost-cutting measures following a letter sent to state institutions instructing heads of departments to freeze the hiring of new employees, freeze non-essential travel and advertising of new infrastructure procurement, as well as spend on catering, conferences, workshops and other services and goods not contracted, among other things.
This was suggested as part of the government's plan 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.
He said revenue collections for the first four months of 2023/24 had performed below expectations, 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 that compared to the 2023 Budget, the economic and revenue outlook had deteriorated and tighter financial conditions had constrained government’s borrowing programme and led to higher borrowing costs.
“Government remains committed to prudent fiscal management and committed to prudent fiscal management and addressing these challenges to ensure the financial stability of the nation,” he said.
The EFF could not be reached for comment, but Saftu spokesperson Trevor Shaku on Sunday said the labour federation opposed the “stringent measures” imposed by the National Treasury to restore “fiscal sustainability”.
“Saftu rejects the fiscal austerity that is being imposed across government departments because of an ideological framework.
Government cannot run out of money to spend on domestic goods and services priced in the local economy,” Shaku said.
Regarding the freeze in hiring new employees, Shaku said the public service was already understaffed and the intermittent moratoriums had further detrimental consequences on the departments.
He added that the freeze on procurement on infrastructure would adversely affect the infrastructure backlog in the public sector.
“Freezing procurement of ‘goods that have not yet been contracted’ will certainly have an impact on the smooth operations of public institutions,” he said.
SACP general secretary Solly Mapaila said his party was opposed to austerity, which involved cutting government service delivery and development expenditure.