South African President Cyril Ramaphosa said lower spending is \u201cnot necessarily\u201d the answer to the country\u2019s fiscal challenges, even as his government grapples with declining revenue. <\/p>\n\n\n\n
The National Treasury is facing a massive shortfall and has already told the government to brace for a tough time when the finance minister delivers the medium-term budget policy statement in October.<\/p>\n\n\n\n
\u201cThe revenue projections that we had have been lower than what we had anticipated. That immediately tells you that we are going to have headwinds,\u201d Ramaphosa said in Johannesburg on Saturday. <\/p>\n\n\n\n
\u201cWhat should we do? The discussion is ongoing. It is not necessarily cutting spending, it is seeing how best you focus on your key delivery areas,\u201d he said. After taking into account key investment areas, \u201cyou look at how you recalibrate the other spending, you re-prioritize,\u201d he added.<\/p>\n\n\n\n
South Africa\u2019s budget balance swung to a deficit of R143.8 billion in July, the largest since at least 2004 and more than the R115.5 billion forecast by economists. There was a surplus of R36.7 billion in June.<\/p>\n\n\n\n
The head of Treasury\u2019 budget office, Edgar Sishi, told a conference on Friday that the October policy statement won\u2019t be \u201chappy for the spenders.\u201d <\/p>\n\n\n\n
In 2020, the Treasury had forecast a primary surplus for three years as well as the stabilization of debt as a percentage of gross domestic product in 2025. <\/p>\n\n\n\n
Sishi said that an increase in spending, particular to mitigate the impact of Covid-19 and other domestic shocks, hadn\u2019t resulted in much-needed growth. \u00a0<\/p>\n\n\n\n