Cost containment won't compromise services, says Ntshavheni

Government's looming cost-cutting measures will not compromise service delivery or force departments to abandon crucial delivery projects.

This is according to minister in the presidency Khumbudzo Ntshavheni, who was briefing the media on the outcomes of the cabinet meeting that took place on Wednesday.

Ntshavheni said cabinet believed the current fiscal constraints are not unique to South Africa.

“Cabinet appreciates the current fiscal constraints, which are not unique to South Africa but have resulted in budget shortfall. Cabinet has iterated that measures to address the budget shortfall must not impact negatively on service delivery.”

“The current fiscal constraints are not domestic, they are global. We cannot plan only for the short term, we must plan for medium and long term given that we don't have control over the external factors, over the constraints.”

She said finance minister Enoch Godongwana would clarify the unintended misunderstanding arising from the cost-containment letter issued by the National Treasury at the end of August when he presents his medium-term budget policy statement in November at parliament.

The cost-containment letter proposed radical measures to rein in runaway government spending, warning of “unprecedented challenges” and raising a red flag over South Africa's deteriorating public finances.

Despite the warning of government's desperate financial position and dwindling tax revenue, Ntshavheni said cabinet maintained its view that the measures to be undertaken by the finance minister on the budget shortfall must not affect service delivery.

“In addition, as part of the in-year performance review of progress in implementation of priorities agreed to with ministers, the president and deputy president will meet individual ministers to ensure that fiscal management does not derail the agreed-to priorities.”

The mooted steps include a freeze on advertising new appointments, a drastic reduction in spending and a call on departments to fund increases for public servants “within departmental baselines”.

The spending cuts have been widely welcomed and indicated government had “run out of money” and faced a “debt trap” as growth had stalled in the past few years.

Ntshavheni said Godongwana was expected to issue guidelines to clear the air soon.

“On the budget shortfall, the Treasury has informed us that the shortfall amount changes as tax revenue comes in on a monthly basis. I will allow the finance minister to brief the country on the specific amounts, noting the sensitivity of the markets on these pronouncements.”

The minister in the presidency commended the country's financial system and its budgetary policy's flexibility in being able to put measures and interventions in place.

She, however, confirmed that none of those measures would result in cabinet cutting down on its projects.

“At the moment, there are no projects cabinet is looking at cutting.”

Ntshavheni said government would have to pursue other means of funding that don't result in loans and further debt.

“We need to find additional resources which are non-debt. Now with the funding of the just energy transition, the bulk of the funding is debt. It's like committing future generations to debt for the sins of the past and its previous generations.”

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