Cost containment will ensure prudent management of finances: Ramaphosa

The cost containment measures introduced by the National Treasury to rein in runaway government spending are necessary.

This is what President Cyril Ramaphosa told MPs during a question-and-answer session in the National Assembly on Thursday. 

“The cost containment guidelines issued by the National Treasury give advice and guidance to government departments to ensure a sound and prudent management of public finances in the context of significant constraints,” he said. 

The Treasury has proposed drastic measures to trim the fat and curb wastage in government spending, warning of “unprecedented challenges” and raising a red flag over South Africa's deteriorating public finances. 

DA leader John Steenhuisen asked Ramaphosa about finance minister Enoch Godongwana’s cost containment instructions issued on August 31.

Ramaphosa said: “The increase in fiscal constraints is mainly due to reduced revenues. The cost containment guidelines target non-critical spending items such as travel, catering, accommodation and capital items that have not yet commenced.”

He said he noted Godongwana’s medium-term budget policy statement tabled on Wednesday which outlined the country’s fiscal position and provided information on government’s spending priorities over the next three years. 

“Among other things, the minister of finance indicated in the MTBPS that we are resolved to stabilise public finances while maintaining support for the most vulnerable [people] and protecting frontline services.

“At the same time, we are fast tracking growth-enhancing reforms, which include a new financing mechanism for large infrastructure projects.

“Work is under way to reconfigure the structure and size of the state, while strengthening its capacity to deliver quality public services.”

This, he said, is based on addressing the issue of underspending which arose from departments not having the capacity to spend what has been allocated to them. 

“If you take that into account as well, you will see that the reduction has been aligned to the issue of underspending.”

He said the discussions that he has had with his deputy, Paul Mashatile, and his ministers focused on how the programmes and activities undertaken by government departments advance economic growth, social development and service delivery. 

“Ministers and their departments engage with the Treasury on how best to implement any budget restructuring and how to delay projects where necessary without compromising the needs of communities. 

“As indicated in the MTBPS, we are on course to prudently manage government expenditure while we retain our focus on infrastructure, health, education and policing as critical areas of growth and development.”

He assured MPs that the government was seeking to focus on effective funding mechanisms for infrastructure projects. “That will require innovative funding mechanisms,” he said.

Other measures are going to be along the lines of “build, operate and transfer” where the government will work with the private sector on a developmental approach. 

He said the government will target infrastructure mafias. 

Steenhuisen told Ramaphosa that Godongwana delivered a budget based on “misplaced priorities”.

“Your government and minister took R57m from the department of basic education set aside for eradicating pit toilets at schools to fund even higher salaries for deployed cadres. This is though more than 55,000 of your bureaucrats now earn R1m a year.”

The cuts, he said, are “a slap in the faces” of families whose children who have died in pit toilets in the Eastern Cape.

“To fund the debt and these cuts, will you raise taxes in the budget in February next year for South Africans?” 

Ramaphosa said Steenhuisen will get his response in the 2024 budget.