Minister in the presidency Khumbudzo Ntshavheni said her finance counterpart, Enoch Godongwana, would “shortly issue” guidelines clarifying the “unintended misunderstanding” arising from the cost-containment letter issued on August 31.
“In addition, as part of the in-year performance review of progress in implementation priorities agreed to with ministers, the president and deputy president will meet individual ministers to ensure that fiscal management does not derail the agreed to priorities,” Ntshavheni said during a post-cabinet media briefing on Thursday.
The Treasury issued a memo to various departments recently, warning that the government faced unprecedented revenue and spending pressures as the economy faltered amid load-shedding, inflation and stagnant growth.
It proposed a raft of measures to rein in public spending, including implementing a wage freeze, a moratorium on new projects and cutting down the number of government departments.
These proposals, however, were roundly rejected by organised labour, whose leaders held a virtual meeting with President Cyril Ramaphosa under the auspices of the National Economic Development and Labour Council (Nedlac) on Tuesday, where they urged the government to strengthen state institutions and provide support to Eskom to create economic growth and reduce joblessness.
The Sunday Times reported that Ramaphosa and his ministers had been briefed that the government would have to raise VAT or close dozens of state programmes to lower spending sufficiently, to allow it to continue with the R350 social relief of distress (SRD) grant beyond March next year. By one Treasury projection, the SRD grant could cost the country R129bn a year by 2030/31.
Data released by the Treasury last week showed the budget deficit had hit R143.8bn, the largest since 2004 and greater than economists’ forecasts of R115.5bn.
Ntshavheni said: “Cabinet appreciates the current fiscal constraints, which are not unique to SA but has resulted in a budget shortfall. Cabinet has iterated that measures to address the budget shortfall must not impact negatively on service delivery.”
The minister in the presidency said the cabinet was updated on the current planned maintenance programme that Eskom was implementing to ensure the sustainability of its plant: “The concerted implementation of the planned fleet maintenance programme has resulted in increased stages of load-shedding in recent days. The implementation of stage 6 load-shedding in the last week was a regress from the trends that prevailed in the previous weeks of lower stages of load-shedding.”
The cabinet, said Ntshavheni, was assured that the increased stages of load-shedding was a short-term phase as the struggling power utility prepared for more sustained and lessened load-shedding stages in the “not-so-distant future”.
“Electricity minister Kgosientsho Ramokgopa will continue to update the nation on the progress being made to address the current electricity challenges and the steps being taken to ultimately end load-shedding.”
The meeting of the cabinet on Wednesday welcomed investment pledges of about R5bn by vehicle components manufacturers during the National Association of Automotive Component and Allied Manufacturers (Naacam) show recently.
“These pledges by companies operating in SA show the confidence of the industry in the SA market and the opportunities to localise production of components, providing auto assemblers with a more resilient supply base,” Ntshavheni said.
The cabinet also welcomed the creation of 750 jobs at the Rainbow Chicken factory in Hammarsdale, “which points to the success of the implementation of the poultry master plan”.
“During 2017, Rainbow Chicken had retrenched more than 1,000 workers and closed the operations. After adoption of the master plan, the government implemented a variety of measures to safeguard the local poultry industry including placing anti-dumping duties on poultry imported from producers in five countries,” Ntshavheni said.
“This, together with increased investment and measures to transform the industry and bring more black-owned firms into the market, has seen real successes. Rainbow Chicken has since reopened and invested R220m. Overall employment within the poultry industry has been reported to have increased by 2,780 jobs, and more than R2bn in fresh investment has been implemented.”
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