Cape Town mayor not pleased with Finance Minister’s budget

Finance Minister Enoch Godongwana. Picture: Leon Lestrade/Independent Newspapers

Finance Minister Enoch Godongwana. Picture: Leon Lestrade/Independent Newspapers

Published Nov 4, 2023


While the ANC in the Western Cape has welcomed Minister of Finance Enoch Godongwana's Medium-Term Budget Policy Statement (MTBPS), the City of Cape Town and the Free Market Foundation (FMF) have lambasted it, saying it did not provide any solutions to grow the country's economy or improve service delivery.

Delivering the MTBPS, Godongwana said government spending had exceeded revenue since the 2008 global financial crisis, and these rising annual budget deficits had reached an extent where the government would have to borrow an average of R553 billion a year over the medium term.

“As a result, gross debt rises from R4.8 trillion in 2023/24 to R5.2 trillion in the next financial year. By 2025/26, it will exceed the R6 trillion mark. We now expect gross government debt to reach 77% of GDP by 2025/26. This is higher than the level we forecast in February. Over the next three years, debt-service costs as a share of revenue will increase from 1.7% in 2023/24 to 22.1% in 2026/27. The cost, or interest, of this debt for next year alone amounts to around R385.9 billion,” he said.

Godongwana said that as a result of the situation the country found itself in, the government was taking measures to cut expenditures.

“Therefore, this policy statement sets out our strategy for avoiding a fiscal crisis and preventing the build up of systemic risks to the economy. The decisions we have taken include spending reductions and reprioritisation, while also taking concrete steps to support growth,” said Godongwana.

He said in the current financial year, spending had been revised down by R21bn.

“For 2024/25 and 2025/26, the reductions are R64 billion and R69 billion, respectively. These are based on current revenue projections and do not take into account future revisions to revenue forecasts.”

Among those who will be affected by these cuts are municipalities and provinces.

Cape Town Mayor Geordin HillLewis is not pleased by these cuts, saying the national cabinet had chosen to cut pro-poor funding over government waste, with far-reaching consequences for local government.

“These cuts amount to over R107m for Cape Town's human settlement grants in 2023/24 alone. Cuts to Cape Town's national funding share include R37mn from the Informal Settlement Upgrading Partnership Grant and R70m from the Urban Settlements Development Grant. The Finance Minister had every chance to cut wasteful government expenditure, including R3.5bn in VIP security. Several national government departments also serve no purpose other than to bloat the National Cabinet,” said Hill-Lewis.

FMF said while it welcomed the minister's conservative intent, the budget included few hard commitments to meaningfully cut spending.

“We urge the National Treasury to take the steps needed to mitigate the current economic crisis that South Africans are facing.

“Our economic situation demands decisive action. The current gross deficit is R54.7bn higher than forecast in the February Budget and could well be much higher if current budget trends are realised. Taxpayers simply cannot afford the extent of government spending. Serious cuts need to be made urgently,” said David Ansara, CEO of the FMF.

The ANC Western Cape provincial spokesperson, Muhammad Khalid Sayed, commended the minister for the work done during the MTBPS.

“Despite the challenges we face, we welcome the reaffirmation of, and subsequent commitment to, the priorities of the sixth administration in the budgeting framework.

“We note and welcome the unwavering commitment to social development priorities: social wage support of 3.7 trillion over the next 3 years, including 927 billion for basic education; the commitment of 767 billion for health; and 196 billion for free higher education. Additionally, funds are also being allocated to the sectors that are personnel-intensive, such as health, education, and police services,” said Sayad.

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