National Treasury warns of more cuts in departments' budgets, to reduce spending by R250bn in two years

By Siyabonga Mkhwanazi Aug 26, 2020

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Cape Town – The National Treasury has warned of further cuts in the budgets of departments as it continues to reprioritise spending following the outbreak of Covid-19.

Deputy Minister of Finance David Masondo told Parliament on Wednesday that some of the departments would have to face budget cuts.

He said they were aiming to reduce spending by R250 billion in the next two years. Masondo said each department’s budget would not be guaranteed until every item has been properly justified.

President Cyril Ramaphosa and Finance Minister Tito Mboweni have spoken about zero-based budgeting. This would mean that the budget would not be based from the baseline of the previous financial year, but each item would have to be justified in each department.

He said they want to stabilise the national debt by the 2023/24 financial year.

However, this would require spending reduction of R250bn in the next two years.

“The National Treasury, in collaboration with departments, will be undertaking spending reviews. In this regard, there will be no holy cows,” said Masondo.

“The spending reviews will be presented in the Medium Term Budget Policy Statement and the 2021 Budget,” he said.

Mboweni will present the MTBPS in October and the main Budget in February next year.

He added that they will conduct spending reviews with departments and each item in their budgets must be justified before funds are allocated.

He said when Mboweni presented his special budget in June to fight Covid-19, he indicated there was a revenue shortfall of R300bn.

The government would have to plug this hole in the budget.

Political Bureau

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