Treasury admits to looming debt crisis
7 August 2023
When Finance Minister Enoch Godongwana tabled his budget earlier this year he was projecting revenue off economic growth of 1.4% from 2023 to 2025. Actual growth is close to zero and has resulted in a revenue shortfall of almost R60 billion.
Large expenditure items such as the wage bill surge and Municipal debt to Eskom write off’s, were not accounted for and has brought the credibility of the Budget into question.
The unexpected 7.5% surge in the wage bill, which will amount to an additional R37.5 billion expenditure, highlights the lack of prudent planning by Treasury. Such drastic miscalculations inevitably lead to further austerity for Government Departments. Instead of channelling funds towards bolstering service delivery, Department’s will now be grappling to accommodate these wage hikes. Government must make choices between funding a bloated administration and funding services. It clearly is not willing to do that.
Minister Godongwana's decision to yield to the labour unions’ R37.5 billion demand – a sum that will predominantly find its way to the pockets of the ANC's millionaire manager class – is a testament to his party's skewed priorities.