Government spending plans hinge on tax agency hitting target, finance minister says
SA will need to slash spending if its tax agency does not meet its revenue collection target this year, finance minister Enoch Godongwana says, as the government focuses on keeping rising debt under control.
Godongwana was speaking after making only minor adjustments to the government's spending plans and deficit projections in a third budget presented to lawmakers on Wednesday. His two previous attempts were scuppered by disagreements within the ruling coalition, chiefly over since abandoned plans to raise value added tax, that had rattled investors' confidence.
Speaking to Reuters in an online interview on Thursday, Godongwana said the government did not expect to overshoot on spending.
He said if the SA Revenue Service raises more than its target of R1.9-trillion in the fiscal year that ends in March 2026, there will be no need for R20bn in additional taxes pencilled in for the 2026/27 fiscal year.
However, if that target is not met, "we will have to cut expenditure substantially", he said.
Godongwana said the higher debt peak of 77.4% of gross domestic product that featured in his new budget reflected weaker economic growth forecasts rather than extra borrowing.
Debt would peak this year, he maintained, saying doubters predicting further slippage were wrong.
Financial officials will decide in July, after the SA Reserve Bank signs off its accounts, whether to draw on gains in its Gold and Foreign Exchange Contingency Reserve Account, which it started tapping last year to limit borrowing.
Godongwana said friction within the coalition government over the budget had, meanwhile, eased.
He said: "That noise has been exhausted. Everyone understands we have to get on with the work."
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