Cape Town – Minister of Finance Enoch Godongwana has warned that the country could run out of cash by the end of March 2024 if it doesn’t reduce expenditure and increase borrowing.
Godongwana said this during the annual Kgalema Motlanthe Foundation Investment Growth Forum on Friday
The minister is set to deliver the mid-term budget speech and has faced concerns about austerity measures.
According to EWN, he emphasised the need to manage finances more prudently by cutting expenditure while increasing borrowing to address the capacity issues within the country.
“First thing we’ve done is to manage this thing in a more prudent way, do a combination of cutting expenditure, and bumping up borrowing,” the report quoted him as saying.
Finance Minister warns South Africa is running out of money
Finance Minister Enoch Godongwana has warned that South Africa is at risk of running out of cash by March 2024.https://t.co/nArBJ7jnFp— Daily Investor (@DailyInvestorSA) October 29, 2023
Godongwana emphasised the necessity for the government to boost its borrowing to avoid significant cuts in spending.
“The first thing we’ve done is to manage this in a more prudent way through a combination of cutting expenditure and bumping up borrowing,” IOL quoted him as saying.
“We’ve been forced to bump up borrowing a bit more than we have predicted in the year because if we didn’t do that the [budget] cuts would have been more massive. So we have to do a combination of both.”
The finance minister, however, cautioned about the present condition of government borrowing, noting that upcoming debt payments could exhaust fiscal resources by the close of the current fiscal year.
Godongwana said that the annual debt servicing expenses amounted to a staggering R366 billion, surpassing the yearly budget allocation for the police department.
“If you see that the police budget in this current financial year is R111bn, health is about R253bn, education is about R306bn, debt service costs are the single biggest item sitting at R366bn,” he said.
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Compiled by Betha Madhomu
