South Africa: Eskom Blackouts and Transnet Troubles Imperil Public Finances, Warns Godongwana

Although Finance Minister Enoch Godongwana has not confirmed that budget cuts are in the offing, the National Treasury has already told provincial government departments to start cutting costs to prevent a collapse in public finances.

Finance Minister Enoch Godongwana said the intensity of Eskom blackouts and perennial inefficiencies at Transnet’s operations have undermined any efforts to grow the economy this year, which is also putting public finances under immense pressure.

The harm caused to the economy and public finances is so severe that Godongwana is expected to announce wide-scale cuts to the budgets of provinces for 2023 and 2024 when he presents the Medium-Term Budget Policy Statement on 25 October.

“There have been a number of changes since we presented the Budget [in February] and all those changes are beginning to impact negatively on the fiscal framework,” Godongwana told Daily Maverick.

Since Godongwana presented the 2023/4 Budget in February, South Africa’s economic fortunes have turned for the worse, with Eskom blackouts surpassing those of 2022, trains and ports operated by Transnet continuing to be unreliable and commodity prices tumbling. Because of these factors, the government is heading for a bigger-than-expected budget deficit this year, as its revenue from tax collections (especially from mining companies) is declining while state expenditure is rising.

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“In that sense, we will apply some of these issues when we table the Medium-Term Budget Statement on 25 October,” Godongwana said.

The February…

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