UDC gov’t slows spending by P5.5 billion
Thabo Lewanika | Monday August 18, 2025 06:00
This slowdown reflects targeted cost-cutting efforts as the country navigates an unprecedented fiscal crunch.
The government has had to apply the brakes on spending due to revenues being on free fall, with the mainstay of the country’s economy, diamonds selling at a snail's pace. The Umbrella for Democratic Change (UDC) government, which assumed power last year in November, has announced that it has spent P5 billion less than what its predecessor government had spent in an eight-month comparison between November and June this year. . Responding to a question in Parliament, Minister of Finance, Ndaba Gaolathe, said that the country's fiscus was still dwindling, with expenditure still outpacing revenues.
“In 2024/2025, expenditure for the period was P52.7 billion, lower than P58.2 billion recorded in the 2023/2024 period. This demonstrates personal restraint despite unavoidable obligations,” he said.
Public sector salaries continued to be the bulk of expenditure, with the government paying out P23.8 billion worth of personal emoluments and salaries between the months of November and June this year. While overall expenditure has declined, personal emoluments have increased due to a 5% adjustment to the salaries of public sector employees this year.
The restraint in spending comes as the diamond market continues to face severe headwinds affecting mineral revenue for the government. This has caused the government to squabble for every penny that drops in its coffers as mounting pressure from monthly salaries and suppliers continues to mount.
A recovery in the diamond sector still remains unlikely this year, with global diamond trader De Beers, the global diamond giant, slipping into losses amounting to $189 million for the first six months of 2025. The losses affirm the protracted slump in the market, and offer no relief for pressed government coffers.
In November, Ndaba had spooked the country with a statement in Parliament saying the State of the coffers was at a record low. In a statement that still echoes in the minds of many, Ndaba had said the financial crisis was worse than what met the eye. 'What I can say is that the situation is bad, worse than what we had thought”.
“It’s so bad that when I was talking with the President, I said we have to start by decreasing his salary and mine for perhaps a year, in order to right the ship,” he said
The Finance ministry now expects the economy to either experience zero growth or contract this year, whilst the forecast P22 billion deficit will widen, as the recovery from a two-year diamond slowdown has grown uncertain due to US trade tariffs, Mmegi has learnt.
The latest forecast comes as Finance ministry technocrats prepare the country’s inaugural mid-term budget, which will provide a half-year revision of the estimates provided in the February budget.
In a week in which the country was shaken by more revelations of the dire hand-to-mouth state of public finances, Finance ministry officials announced that the local economy was facing the possibility of the first-ever double recession since Independence in 1966.
The economy last year contracted by 3 percent and was due to rebound by 3.3 percent this year, an achievement Permanent Secretary Tshokologo Kganetsano told legislators earlier this year, which was impossible due to the prolonged diamond slump.
Currently, the MOF has decided to suspend the generation of Government Purchase Orders (GPOs) from the Government Accounting and Budgeting System (GABS) due to the current liquidity challenges faced by the government.