Gov’t to revise spending as H1 wraps up

Mbongeni Mguni | Monday September 8, 2025 10:25

At the time of the original 2025–2026 budget speech in February, government expected revenues to reach P75.5 billion, with minerals contributing P15.8 billion or about 21%. The budget was due to carry a deficit of P22.1 billion or 7.6 percent of Gross Domestic Product (GDP).

However, the eagerly awaited recovery from the prolonged downturn in diamonds has not happened, with the United States' global tariffs adding greater uncertainty to the economically key sector.

Other contributions from the Southern African Customs Union and various taxes have been affected by the broader performances of the local and regional economies.

At an investor roadshow on Tuesday, Finance Minister Ndaba Gaolathe spoke about first and second round fiscal reforms to cut back on spending, which he said would be made clearer in the upcoming mid-term budget review.

The mid-term budget review statement will come after September 30, which is the end of the first half of the government’s financial year.

“Our first round of cost-containment measures, which include the centralisation of Government Purchase Orders, have revealed a widespread systematic gross mismanagement of control measures across ministries, departments, and agencies,” he said. “Additional fiscal reforms such as payroll audit, wage bill management, government fleet management, and the process of repairing and restoring discipline in the process of supplementary budgets are currently underway. “These efforts will be unpacked in the upcoming mid-term budget review statement.”

Gaolathe, who is also the country’s Vice President, said government teams were “working around the clock” to ensure that “every pula spent goes strictly towards essential goods and services”.

Fiscal reforms under the payroll audit and civil service wage management are part of long-running concerns expressed by institutions such as the International Monetary Fund on the size and efficiency of the public service.

Whilst Gaolathe did not touch on the third round of cost-containment measures, these are expected to include slowing project spending or shifting work to the private sector through partnerships.

Finance ministry insiders told BusinessWeek that intensive work was ongoing to assess the performance of the budget in the first half of the financial year and balance that with the projections for the second half.

Whilst the challenges with the Government Accounting and Budgeting System (GABS) have largely been ironed out, there are numerous outstanding revenue and spending transactions to be reconciled, which complicate the upcoming mid-term budget review.

Recently, Gaolathe said the reconciliation problems date back to the failure of GABS from 2023 and have resulted in over-expenditure of budget allocation by some government ministries and departments that were only now being picked by the reconciliations.

“The GABS suffered technical challenges from 2023 and could not load some operational transactions or post them to the general ledger,” he said in response to a question in Parliament recently.

“Pending transactions are still being posted to the general ledger and revealing over-expenditure, which will affect the final public finance figures. “Some ministries' expenditures are higher than revenues generated in some reporting periods, resulting in deficits which affect the subsequent reporting period because obligations are carried over for payment,” he said.

Finance ministry officials told BusinessWeek that while there were signs of recovery in diamonds, the industry was still in flux, making it difficult to forecast revenue patterns in the second half of the year.

“The only control we really have is on spending, because revenue is highly dynamic, with US tariffs. “In addition, as government slowed its spending in the first half, you can expect sectors such as construction and others which are highly dependent to be equally affected in terms of tax revenues,” an official said.

The official added that the inaugural mid-term budget is seen as critical to improved planning and scenario forecasting, with the ongoing automation of government systems and the recent legislation of electronic Value Added Tax billing, expected to enhance public finance management.