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Western Cape Scrambles To Handle R13bn Budget Cut Brought On By Eskom Bail-Out

The Western Cape government is in a scramble to readjust its budget after a R13 billion cut across all departments brought on by the bail-out of Eskom.

The health department is appealing to the Treasury in a bid to dodge potentially devastating budget cuts.

Last year, Finance Minister Tito Mboweni’s Special Appropriations Bill, also known as the Eskom Bill, sought to cut money to the provinces and hollow out provincial budgets to bail out the ailing national power producer.

Treasury asked provinces to look at ways to cut their budgets by 5%, 6% and 7% respectively over the next three years as a result of the Eskom bailout.

According to DA Western Cape finance spokesperson Deidré Baartman: “In the Western Cape in particular, this would amount to R13 billion.”

A month ahead of the national budget on February 26, the provincial health department, which currently faces a R500m shortfall on its R24bn budget for 2020/2021, has put its case to the provincial treasury in the hope of an exemption.

At a press conference last week, incoming department head Dr Keith Cloete said: “Provincial treasury is in a very difficult situation. We are heading towards the end of January. Our provincial treasury is still not sure what the final figure will be for the budget they will get as part of the national distribution of resources, and as such cannot say how they will divide their share of the budget between departments in the Western Cape.”

Cloete said the department had met provincial treasury to try and find out about the cuts they were facing, “and what the prospects are if the cuts that are envisaged are visited upon our department”.

Cloete said the health department’s senior management were acutely aware of just how “things can go wrong very quickly in the face of such significant budget cuts that can destabilise the system.

“Budget cuts have the potential for setting us on a backwards slide which basically means you go back to point one very much faster than it took you to build your reserves up,” said Cloete.

Outgoing department head Dr Beth Englebrecht said: “We made a very strong case and we were complimented for the compelling case we made.”

Health MEC Nomafrench Mbombo said: “The public health system is generally under pressure in the face of budget cuts as well as from urbanisation and migration from other provinces.”

In a non-committal response when asked about the situation the health department faces, Finance and Economic Opportunities MEC David Maynier said: “National government’s mismanagement of the economy and public finances will result in severe budget cuts. Provincial treasury will do everything they can to mitigate the impact and protect frontline services, including health.”

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Written by How South Africa

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