Cape Town - South Africa’s nine provinces will have to make do with R14.9bn less than estimated in the Medium Term Budget Policy Statement to make provision for funding requirements elsewhere, Finance Minister Pravin Gordhan said in his Budget Review for 2016.
Rising compensation costs of employees put a strain on provincial finances, which would increase to 61%, mainly for the salaries of teaches and healthcare workers.
“Although the total number of staff employed on provincial level has decreased to just under 900 000 at the end of 2015 further reductions will be required,” Gordhan said.
In addition other cost-saving measures, such as spending on catering, venues and consultants, will also be applied.
Municipalities won’t escape cost-cutting measures either and Gordhan cautioned that they face “tough fiscal choices in the period ahead”. Funds allocated to municipalities will be R300m less in 2016- to 2017.
Direct transfers for infrastructure have also been reduced by 3,5% over the medium term, but the reduction can be offset by cutting under-expenditure that averaged 9% in 2014/15.