Cape Town – Finance Minister Enoch Godongwana has reportedly refuted claims that the government has depleted its finances, clarifying that the issue is lower-than-expected revenue collection.
According to IOL, he emphasised the government’s commitment to prudent financial management to maintain service delivery.
This comes amid criticism of cost-cutting measures proposed by the National Treasury, sparking concerns about their impact on services.
Godongwana said that the economic and revenue outlook has worsened, leading to a higher budget deficit due to under-collections in corporate income tax and increased VAT refunds.
“To be clear, the government has not run out of money,” said Godongwana who was responding to a written parliamentary question from EFF MP Mzwanele Manyi.
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“Government publishes the ‘Statement of the National Government’s Revenue, Expenditure, and Borrowing’ monthly, available on the National Treasury website. This statement provides detailed information into government revenue collections, expenditure and borrowing,” he said.
“Revenue collections for the first four months of 2023/24 have performed below expectations, primarily due to under-collections in corporate income tax and higher VAT refunds. Therefore, the main budget deficit for the first four months of 2023/24 is higher than expected,” Godongwana said.
He added: “Compared to the 2023 Budget, the economic and revenue outlook has deteriorated, and tighter financial conditions have constrained government’s borrowing programme and led to higher borrowing costs. Government remains committed to prudent fiscal management and addressing these challenges to ensure the financial stability of the nation.”
Economists warn that a stagnant economy could pose further difficulties for the country.
According to GroundUp, the Institute for Economic Justice has warned that “chaotic budget cuts” are not the answer to the shortfall between tax collections and government spending.
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Compiled by Betha Madhomu
