The Gauteng government is facing significant financial pressure following the scrapping of the controversial e-toll system. With a debt of R20.1 billion owed to the South African National Roads Agency (Sanral), the province must redirect resources to honor its obligations while managing an already constrained budget.
Speaking during the Medium-Term Budget Policy Statement on 26 November, Finance and Economic Development MEC Lebogang Maile outlined the fiscal adjustments required to accommodate this debt. Maile emphasized the province’s commitment to maintaining fiscal stability despite the strain.
“The obligation to service this debt has necessitated implementing reforms and measures to ensure a sustainable financial future,” Maile said.
The e-toll system, part of the Gauteng Freeway Improvement Project, was introduced to fund highway upgrades. However, public backlash from motorists, businesses, unions, and civil society ultimately led to its abandonment. Despite its cancellation, the financial obligations remain.
In September, Gauteng made an initial payment of R3.8 billion toward the debt, with plans to settle the total amount in five annual installments. Maile acknowledged the financial challenges this imposes, stating, “To meet these obligations, we have had to make difficult budgetary decisions, which will inevitably impact our fiscal landscape.”
Adjusting the Budget
The 2024/25 budget will see adjustments totaling R2.1 billion to address immediate and critical needs. Key allocations include:
- Office of the Premier: R135 million, including R73.9 million for outstanding Life Esidimeni claims and R57.4 million for the Usindiso Building fire inquiry.
- Gauteng Provincial Legislature: R53.7 million for operational requirements and political party support.
To manage outstanding expenses, R1.2 billion will be carried over from the 2023/24 financial year, covering goods, services, and capital commitments.
Despite budget cuts from the National Treasury, Maile reassured the public that essential sectors such as health and education would remain protected from job losses.
Protecting Essential Services
Maile announced additional funding to support compensation in key departments:
- R600 million for Health
- R300 million for Education
- R70 million for Social Development
- R59 million for Environmental Affairs
- R2 million for Infrastructure Development
These allocations reflect the province’s commitment to safeguarding jobs in critical sectors while addressing budgetary pressures.
Restoring Social Development Funding
Earlier this year, budget constraints led to a R223 million reduction in the Gauteng Department of Social Development’s budget for services to vulnerable groups. This decision impacted thousands of beneficiaries. Maile announced that an additional R221.8 million will be allocated to restore this funding to previous levels, emphasizing the importance of protecting society’s most vulnerable.
Emphasizing Fiscal Discipline
Maile underscored the need for fiscal discipline to navigate the province’s financial challenges. “Fiscal discipline ensures macroeconomic stability and sustained growth,” he said, urging departments to explore alternative funding sources such as public-private partnerships (PPPs), donor contributions, and developmental finance.
The provincial government views PPPs as a cornerstone for economic stimulation, job creation, and infrastructure delivery. By leveraging partnerships, Gauteng aims to mitigate financial constraints while meeting developmental goals.
Looking Ahead
As Gauteng grapples with debt repayment and limited resources, the provincial government is prioritizing fiscal sustainability and social protection. While tough choices lie ahead, commitments to health, education, and social development underscore the province’s focus on maintaining essential services and supporting its residents during challenging times.
