More money allocated as e-toll debt bites into strained Gauteng finances

The Gauteng e-toll debt of R20bn inclusive of interest is a substantial bite into the already stretched and limited provincial resources. 

This was revealed by the MEC of economic development and treasury, Lebogang Maile, as he announced that in the 2024/25 financial year, the budget will be increased by R2.1bn.

He was presenting his medium-term budget policy statement on Tuesday. 

“The overview that I provided on the state of the South African and provincial economies illustrates the seriousness of the financial and economic environment in which we are operating. To meet our obligations to this debt, we have had to make very difficult decisions and reorientate our budget priorities which, necessarily, will affect the fiscus,” he said. 

Maile said this will be particularly pronounced in the 2025 medium-term expenditure framework (MTEF) given developments in the provincial equitable share formula.

The formula is recalibrated annually using data from Stats SA and other administrative sources such as the national departments of health and basic education to ensure equitable resource allocation.

“Unfortunately, due to a decline in Gauteng’s share of the national population, the province faces further budgetary reductions. Key components such as education, health and poverty alleviation, which collectively account for 91% of the PES formula, will be affected, creating additional fiscal pressure,” he said. 

He added that this effect would be minimised to ensure that basic services continue to be provided to residents.

The gantries of the Gauteng Freeway Improvement Project were officially disconnected from the e-toll system across the province in April this year. This followed the initial announcement by finance minister Enoch Godongwana during his 2022 midterm budget policy statement (MTBPS) that e-tolls would be scrapped.

The South African National Roads Agency (Sanral), the national department of transport, the National Treasury and the Gauteng provincial government finalised a memorandum of agreement.

To resolve the funding impasse, Gauteng agreed to contribute 30% to settling Sanral’s debt and interest obligations, while the national government would cover 70%.

“The obligation to service this debt has necessitated the implementation of a host of reforms and measures to maintain a healthy fiscal environment that will be both sustainable and manageable in the long term. As the Gauteng provincial government, we have a full appreciation of the implications that repaying the e-toll debt will have on our financial position,” said Maile.

A total of R1.2bn was rolled over to the 2024/25 financial year, comprising R920.9m in conditional grants and R282.5m in the provincial equitable share.

The provincial head of the treasury, Ncumisa Mnyani, said the province had surrendered R2.2bn in unspent funds back to the National Treasury. She said by the end of the financial year, the province had not spent the funds appropriated to it, to the tune of about R3.4bn. 

“We rolled over R1.2bn of that, so we are sitting at about R2.2bn. That's the amount that was not committed, where it was not linked to any invoices or work already done and contracts hadn't been signed to that effect,” she said.

The amount will be sent back to the National Treasury for various departments because it is a national transfer form of conditional grants, she said.

“It is not our money and the other amount will go to the provincial revenue fund, which is the amount that is related to the provincial equitable share.”

As part of supporting the most vulnerable members of society, Maile allocated an additional R221.8m to reinstate the budget allocated to qualifying nonprofit institutions back to the 2023/24 baseline of R2.1bn. 

Mnyani said the department of social development was affected by budget cuts in the province last year. 

“The programmes were actually affected, hence the money they are getting is coming from our provincial revenue fund in terms of additional funding because I think the outcry also demonstrated the need out there for us to take care of the vulnerable in our communities,” she said. 

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