South African Treasury to Seek Spending Cuts, Sunday Times Says

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(Bloomberg) --

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South Africa’s National Treasury will propose a freeze on new public service jobs and procurement contracts for all infrastructure projects to check “runaway” government spending, the Sunday Times reported.

The proposals for “radical measures” were prepared after a cabinet meeting in mid-August at which ministers were warned of dwindling tax revenue, the newspaper said, citing a Treasury document.

The national debt has risen to 4.7 trillion rand ($250 billion) and could reach 6 trillion rand in 2025, compared with 500 billion rand in 2006, according to the Johannesburg-based newspaper.

While the National Treasury has warned the government to brace for a tough time when the finance minister delivers a medium-term budget policy statement in October, President Cyril Ramaphosa said on Saturday that lower spending is “not necessarily” the answer to South Africa’s fiscal challenges.

Read More: Less Spending Not Necessarily Way to Cut Deficit, Ramaphosa Says

South Africa last experienced budget tightening measures about a decade ago to shake off the effects of the global financial crisis, the Sunday Times said.

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