Budget to feature additional austerity measures
Mbongeni Mguni | Wednesday January 14, 2026 06:00
The budget has incurred rolling deficits since the 2017-2018 financial year, largely as a result of declining mineral revenues and stubbornly high spending. The COVID-19 pandemic worsened the situation, forcing government to dig deep into its reserves housed in the Government Investment Account.
Presenting the inaugural mid-term budget review statement recently, Gaolathe stated that while spending cuts had already been initiated in the current financial year, more was needed in light of the weak revenue outlook.
“In light of these prevailing conditions, the upcoming 2026-2027 Budget Speech will outline additional austerity measures, over and above those already in place,” he said. “These measures will be firm, targeted, and implemented without delay. “These actions are necessary to restore discipline to public finances, safeguard our creditworthiness, and ensure that government lives within its means.”
Gaolathe added: “Crucially, the objective of these austerity measures is not merely to cut spending, but to drastically reduce the growth of recurrent expenditure, which continues to place unsustainable pressure on the national budget.”
Annually, recurrent spending forms the bulk of spending in the budget, with civil service salaries and support to parastatals topping the list of expenditure. Analysts such as those at the International Monetary Fund have repeatedly urged the government to reduce its weight on the budget particularly by restraining the size of the civil service.
“By containing recurrent costs, government will create the fiscal space needed to prioritise and encourage development spending, particularly on projects that enhance productivity, expand infrastructure, and support long-term economic transformation,” Gaolathe said.
The Finance Minister stressed that austerity was not an end in itself, but rather a strategic shift aimed at rebalancing the budget away from consumption and towards investment. This, he said, would ensure that limited public resources are directed where they can generate the greatest impact for future growth.
Gaolathe did not specify the additional austerity measures to be announced in the upcoming budget. However, already in the current budget, the Finance Ministry centralised Government Purchase Orders (GPOs) and also introduced a travel moratorium while also curbing overtime payments. Travel costs and overtime pay rank amongst the most paramount drivers across government, the minister revealed.
The additional measures are expected to include the payroll audit.
“The government wage bill has expanded significantly in recent years, posing a risk to fiscal sustainability and crowding out essential expenditures such as health services. “Left unchecked, this trend may also increase national debt. “The audit is, therefore, expected to recommend measures including strengthening existing structures to ensure that the wage bill is brought under control,” he said.
Other measures could also include slowing down certain project spending or reprioritising areas of the development budget.
Gaolathe said the gravity of the macro-fiscal position leaves no room for complacency.
“Revenues are weakening, expenditures continue to outpace available resources, foreign reserves are declining, and our sovereign credit ratings face mounting pressure. “Without decisive intervention, fiscal imbalances will deepen and threaten the country’s economic stability,” he said.