President Cyril Ramaphosa has been pressuring the finance ministry to reduce spending and increase revenue, and South Africans should thus prepare for another tough budget, finance minister Malusi Gigaba told the Mail & Guardian.
Amid speculation that Gigaba could be reshuffled out of the paramount ministry by Ramaphosa after his takeover as head of state, the finance minister has already signaled that his presentation to the national assembly on Wednesday will have little good news.
“South Africans should brace themselves for a tough budget. We have experienced a R50-billion shortfall on top of which we have had to provide funding for fee free higher education. It is important for us to stabilise the debt and close the budget deficit. And so we’ve had to undertake difficult measures to achieve that, which includes cutting spending and raising revenues to address the shortfall,” Gigaba told the M&G.
But Gigaba was hopeful that Ramaphosa’s election would secure new investments to balance the budget.
“It’s going to be a very difficult balancing act but I think the environment is positive and we need to be very optimistic about the trajectory we are taking. President Ramaphosa has provided a very good policy framework to have a good narrative to accompany the figures we will be releasing,” Gigaba added.
The Democratic Alliance meanwhile says the honeymoon between opposition parties and newly elected president Cyril Ramaphosa will be over after the budget.
The DA and most other opposition parties welcomed Ramaphosa’s election and have signaled their willingness to cooperate with them.
“We’re in a honeymoon phase, and it happens with every leader. But then the honeymoon ends, and we’re going to start seeing the end of it with budget. It’s going to be a brutal budget,” DA’s chief whip John Steenhuisen told the M&G.
“To plug a 70-billion deficit you need massive spending cuts. Provinces are already also being told to cut down so the budget is going to bite. Tax increases and potential VAT increases are going to start biting,” Steenhuisen added.