South Africa's National Treasury has released guidelines detailing cost containment measures for government departments as the country attempts to rein in spending ahead of the mid-term budget in November.
In a letter sent to all government departments, treasury outlined the fiscal challenges facing the state and suggested widespread cost-cutting measures.
South Africa's public finances have been in rapid decline as tax collections year to date were 22 billion rand ($1.16 billion) less than the government had forecast in its February budget, according to the guideline document.
Tighter financial conditions and a higher than budgeted for public wage settlement necessitate these new cost-saving measures, the treasury added.
'Much-needed savings'
The guidelines state that cost-cutting would be required "to achieve much-needed savings and prevent the materialisation of potentially crippling resource constraints in the later part of the 2023/24 financial year," the document said.
The proposed measures have drawn criticism from labour unions, with the Congress of South African Trade Unions (COSATU) calling the steps "ill-considered" and adding that they would further incapacitate the nation.
The document calls for greater scrutiny by departments on their spending and stricter control on compensation budgets in order to keep the public wage bill within certain financial bounds.
In addition, the guidelines would put a freeze on capital expenditure for projects that have not yet begun until March 2024.
Impact on elections
Projects in which the procurement process has been completed or bid contracts signed, should proceed.
The treasury said the guidelines were only applicable for the remainder of the financial year.
The country will hold national elections next year. A restrictive budget could hurt the ruling African National Congress' election campaign.
