South Africa plans cost-cutting measures as revenue falls

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JOHANNESBURG, Sept 3 (Reuters) – South Africa’s National Treasury wants to implement a number of cost-cutting measures to rein in government spending after a shortfall in revenue collection, the Sunday Times newspaper reported on Sunday.

The measures include a hiring freeze and a halt in advertising new procurement contracts for all infrastructure projects, the paper reported.

The treasury did not immediately respond to Reuters’ request for comment.

The paper quoted the treasury as citing “the weak performance of the economy, and shortfall in revenue collection” as requiring “measures to contain costs and achieve savings in large spending areas.”

The measures will be effective from Sept. 15.

Economists have said South Africa will overshoot its budget deficit target this year due an expected dip in tax receipts amid sluggish economic growth.

A major constraint in the last decade has been rolling power cuts that have slashed the country’s growth potential and hurt businesses of all sizes.

The economy did manage to eke out growth of 0.2% in annual terms in the first quarter of 2023, but the central bank has said that but for the power cuts growth would be closer to 2%.

The government in October is expected to outline further steps to plug the revenue gap in its medium-term budget policy statement.

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