By Enyichukwu Enemanna
South Africa is considering the implementation of a number of cost-cutting measures to effectively manage government’s spending, as drop in revenue persists.
According to National Treasury, the cost-cutting plan was “due to the weak performance of the economy and the shortfalls in revenue collection.”
The treasury said it had outlined the measures in a letter addressed to national departments, provinces and public entities.
According to a Sunday Times report, the measures also include a halt in advertising new procurement contracts for all infrastructure projects.
The treasury added that it will work with all departments, provinces and public entities to identify further measures to consolidate budgets as “the measures articulated in the letter will not by themselves fully restore fiscal sustainability.”
The measures will take effect from Sept. 15.
Analysts had projected that South Africa will overshoot its budget deficit target this year, arising from an expected dip in tax receipts amid slow economic growth.
A major constraint in the last decade has been rolling power cuts that have slashed the country’s growth potential and affected businesses.
The economy only grew by 0.2% in annual terms in the first quarter of 2023. According to the central bank, growth would have hit 2% if not for the power cuts.
