“The Reserve Bank is saying sooner or later we are going to run out of cash,” says finance minister
Finance minister Enoch Godongwana has warned the country could run out of money by March next year, if rampant spending and the country’s debt crisis is not brought under control.
Addressing the Kgalema Motlanthe Foundation’s annual forum in Drakensburg on Friday, Godongwana said government expenditure was skyrocketing while revenue was slumping.
He said this left him needing to find a balance ahead of next week’s Medium-Term Budget Policy Statement.
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“If we project the loss of revenue over the next few months, up to the beginning of next year, we are going to have serious challenges. That serious challenge is reflected by the Reserve Bank. The Reserve Bank is saying sooner or later we are going to run out of cash.”
He said public debt was complicating the issue, and currently amounts to about R4.5-trillion.
“The police budget for this financial year is R111bn. Health is about R253bn and education is about R306bn. Debt service costs are the single biggest item [on the budget], sitting at R366bn.
“This year alone, the amount of debt we are going to redeem is such that if we do not do anything we won’t have cash by the end of March,” he said, adding he would “sort” the country out.
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The minister highlighted corruption, crime and load shedding as among the societal issues that were affecting SA’s bottom line.
A grim MTBPS ahead
Economic research group, Oxford Economics Africa, this week warned SA’s fiscal position remains a significant risk.
“Diminishing revenue performance amid power supply and logistic constraints, as well as a moderation in key export prices, has rekindled concerns about the fiscus. Misspending, as opposed to just excessive expenditure and poor revenue growth have contributed to the precarious financial position,” said senior economist Jee-A van der Linde.
Additional reporting by Ina Opperman
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