Last chance budget to get green flag
This source said Godongwana was 'even working very well' with his DA deputy minister Ashor Sarupen.
A fourth source said the spending cuts might have an even worse effect on poor people than a VAT increase would have had and predicted there would be 'long faces' in parliament.
'The amount of cuts or reductions is bigger than what VAT would have been had we left it,' this source said.
The trade-off was that instead of increasing VAT, 'you will have to wait longer for your clinic, or you have to wait longer for us to fix this road, or you will have to wait for a train because we can't put in all the signalling equipment'.
Godongwana's first budget included an additional R232.6bn over the medium-term expenditure framework to address spending pressures.
One of the sources said the opposition to the VAT hikes meant Godongwana had no choice but to cut spending.
'So that's what parties have been doing since February,' this source said. 'In fact, what they said was 'we're not going to give you the means to spend an extra R232bn, we reject your proposal'. Then he came back in March with I think it was R179bn.
'The parties said 'we don't want to give you R179bn'. So, he is coming back now, and he is saying from the March version we are going to have to cut another R75bn.'
Godongwana said last month scrapping the VAT hikes would result in a R75bn shortfall in his budget. To cover this, and in the absence of other revenue mechanisms, the minister is believed to have decided to slash expenditure by at least R60bn.
'Well, let's just say the tough choices finally have to be made,' one of the sources said, citing the International Monetary Fund's decision last month to cut its projection for GDP growth in South Africa this year from 1.5% to just 1%.
'We can't borrow more because revenue projections track GDP, so reducing the amount by which we add to the baseline [last October's medium-term budget] is the only option,' the source said.
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Daily Maverick
6 hours ago
- Daily Maverick
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IOL News
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