Finance Minister Enoch Godongwana has issued a stark warning that South Africa could run out of money by March next year if urgent action is not taken to address rampant spending and the country’s debt crisis.
Speaking at the Kgalema Motlanthe Foundation’s annual forum in Drakensburg, Godongwana highlighted the alarming trend of skyrocketing government expenditure coupled with slumping revenue.
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According to Godongwana, the Reserve Bank has already raised concerns about the country’s cash reserves, stating that it is only a matter of time before the country faces a severe cash shortage.
“If we project the loss of revenue over the next few months, up to the beginning of next year, we are going to have serious challenges. That serious challenge is reflected by the Reserve Bank. The Reserve Bank is saying sooner or later we are going to run out of cash.”
The current public debt stands at a staggering R4.5 trillion, with debt service costs alone amounting to R366 billion. If no measures are taken, South Africa could find itself without cash by the end of March.
The minister emphasized that corruption, crime, and load shedding were among the societal issues that were adversely impacting South Africa’s financial stability. These challenges, coupled with diminishing revenue performance and logistic constraints, have further exacerbated the country’s fiscal position.
Oxford Economics Africa, an economic research group, echoed concerns about South Africa’s fiscal outlook. Senior economist Jee-A van der Linde highlighted the combination of misspending, excessive expenditure, and poor revenue growth as contributing factors to the country’s precarious financial situation.
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Given the severity of the situation, Minister Godongwana stressed the need for immediate action to bring the country’s finances under control. He acknowledged that tough decisions would need to be made to address the mounting debt and ensure the availability of cash reserves.
As the government prepares to release the Medium-Term Budget Policy Statement next week, all eyes will be on the proposed measures to curb spending and boost revenue. The minister’s warning serves as a wake-up call for the country to prioritize fiscal responsibility and implement effective strategies to address the debt crisis.
