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South African Government Contemplating Departmental Reductions to Minimize Spending

Published September 21, 2023
9 months ago

This week, a pivotal Stellenbosch meeting held under the umbrella of the National Treasury highlighted the stringent measures that the South African government might have to undertake to maintain the R350 social relief of distress (SRD) grant. Cutting corners on spending may necessitate eradicating or merging a number of government departments, according to the Sunday Times.

Treasury has suggested the augmentation of value-added tax (VAT), or the closing of state programmes. A mere 1% increase in VAT could rake in an additional R24.5 billion, with a 2% increase generating a potential R49.4 billion.

The Democratic Alliance has spoken out against this financial crunch, urging the government to be transparent about its fiscal situations. The treasury meeting has been deemed an indicator of the government's struggle to deliver on its promise to extend the SRD grant.

One of the ways proposed to save costs and ensure the continued payment of the SRD grant, could be the reduction of government departments either by complete closure or an amalgamation process. The Sunday Times article highlighted potential closures such as the Department of Public Works and Infrastructure and the Department of Women, Youth and Persons with Disabilities. This consolidation could save an estimated amount of R17 billion but is expected to meet resistance from within the government and the ANC.

The present financial straits, according to the DA's Dion George, are a result of a "failed economic policy and poor fiscal choices," sealing the government in a crisis of its own making.

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