Finance minister Malusi Gigaba has suggested a government salary freeze, selling parts of state-owned companies, and abandoning nuclear (for now) as some ways to cut back government spending amid a major revenue shortfall.
Gigaba made the suggestions in an interview with the City Press, following his budget speech this week, which was met with widespread negativity, and raised fears of more ratings downgrades for South Africa in the coming month.
The budget speech made it clear that South Africa’s finances were in serious trouble, with the expectation that the country’s budget deficit would widen to 4.3% of GDP, and tax collection would fall short by R209 billion over the next three years.
The dire state of South Africa’s SOEs was also raised, with bailouts needed for SAA and the SA Post Office, with more probably needing a boost at some stage as well.
Some solutions were mentioned by Gigaba in his speech – such as the introduction of some new taxes – but no real map forward was given, until now:
According to the City Press, some of the solutions Gigaba suggested were:
- Freezing South Africa’s nuclear plans until such a time that the country can afford it;
- Potentially freezing the salaries of senior civil servants from middle management upwards;
- Selling off shares in government companies to raise money;
- Reviewing the government guarantee framework policy and possibly stop giving such guarantees;
- Consolidating of SAA, SA Express and budget airline Mango into one company.
The finance minister also distanced himself from the Gupta family, saying he has nothing to do with them, as also denied claims he was setting up a parallel hierarchy within national treasury.
You can read the full story in the City Press for Sunday 29 October 2017