By Lehlohonolo Lehana.
Finance Minister Enoch Godongwana has defended the government’s planned expenditure cuts ahead of the medium-term budget policy statement (MTBPS).
Godongwana briefed Parliament’s Standing Committee on Finance on Tuesday.
He was presenting his department’s annual report.
The move to cut spending has been met with anger from some quarters, especially by labour unions, but Godongwana told MPs the approach will be moderate.
Godongwana said the alternative to expenditure cuts would be raising taxes or more borrowing, which are less palatable.
The minister is expected to detail the budget cuts during his medium-term budget policy statement in November.
“If we are faced with all of this, there are three ways in which we can deal with a fiscal gap. The first one is by raising taxes, and it is difficult to raise taxes. The second option is to raise borrowing. As we will demonstrate in the MTBPS our borrowing is high.
“So the third element becomes expenditure cuts. We have been quite careful in dealing with expenditure cuts. I can assure you that expenditure cuts are even below the normal underspending of R28 billion which we did last year. In the previous year, it was R36 billion.
“So, if you look at that our approach has been moderate in combining expenditure cuts but bump up some borrowing, we will show that in a sustainable way,” he said.
Godongwana told MPs that he was also concerned about a lack of political oversight in municipalities, which leads to financial mismanagement.
Earlier this year, Godongwana denied that the government would soon run out of funds.
“Government is working to manage public finances in a prudent and sustainable manner.
“This includes appropriately responding to the materialisation of risks, including unforeseen economic and financial conditions. To be clear, the government has not run out of money, “Godongwana said in response to a parliamentary question by Economic Freedom Fighters (EFF)MP Mzwanele Manyi.