Questions raised over government’s austerity measures

Economist Dr Thabi Leoka says it seems like the more government talks about cutting costs, the more it spends.

She was reacting to a recent announcement that Cabinet will be implementing austerity measures to address the budgetary shortfalls within national and provincial government departments.

The move comes ahead of Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement scheduled for 1st November.

One of the key concerns experts have raised was that overnment’s attempt to address socio-economic issues through fiscal initiatives have resulted in even more debt-driven financing.

Dr Leoka says the cuts are strategic.

“I don’t fear that, because what has happened over the years was that we’ve actually increased spending in areas that have just been consumption based, and we’ve cut in areas that should’ve led to growth, investment areas. Yes we have taken budget out of areas where there has been under utilisation of funds and that’s mainly because if you look at municipalities, if you look at local government, they’ve been underspending but because these funds have been underutilized, Treasury has had to pull them away and put them in areas where more often than not in areas that didn’t generate growth.