GAUTENG E-TOLL DEBT INSTALLMENT R3.8 BILLION @KASIBCNEWS

GAUTENG E-TOLL DEBT INSTALLMENT R3.8 BILLION @KASIBCNEWS 

In his 2022 Medium Term Budget Policy Statement, the Minister of Finance, Honourable Enoch Godongwana made the following policy pronouncement on the Gauteng Freeway Improvement Project popularly known as E-Toll: “to resolve the funding impasse the Gauteng provincial government has agreed to contribute 30 per cent to settling SANRAL’s debt and interest obligations, while national government covers 70 per cent”.

In the Budget Speech in March this year, Gauteng Provincial Treasury announced that as part of the province’s arrangements to service the debt, a provision for honouring this commitment has been pencilled into the 2024 fiscal framework.

This was followed by the signing of the Memorandum of Agreement between the Gauteng Provincial Government and the National Treasury for the province to honour the debt and the maintenance portion for the E-Toll debt. The obligation to service this debt has necessitated the implementation of a host of reforms and measures to maintain a healthy fiscal environment that will be both sustainable and manageable in the long term.

Today, the Gauteng Provincial Government is starting the process to service the historical debt of R12.9 billion in five equal annual instalments at government 5-year interest rate. The first instalment that we are paying today amounts to R3.8 billion, consisting of R3.2 billion (historical debt) and the maintenance portion of R546 million. The implications of the E-Toll debt require the provincial government to manage finances in a prudent manner whilst carefully balancing the service delivery needs of the citizens.

The fiscal trajectory of Gauteng Provincial Government must be addressed through a combination of active debt management strategies and spending restraint that improves the primary fiscal balance and elimination of wastage and leakages in the system. The province will need to allocate a substantial amount of funds each year for the next five years to meet the repayment obligations.

Therefore, to address these fiscal challenges, Gauteng Provincial Treasury is working with revenue-collecting departments to identify alternative sources of revenue. This aims to ensure that frontline services remain uncompromised, prioritising programmes that foster growth, safeguarding essential social services for vulnerable members of society, maintaining the provision of basic services in the province.

Gauteng Provincial Treasury has a five-year budget approach that will facilitate provincial delivery based on the Medium-Term Development Plan for the 7th Administration. 

The five year budget approach will focus on introducing and implementing immediate, short-term, and medium-term budget reforms over the 2025 MTEF. This include maintaining fiscal discipline and credibility, and impactful service delivery.

Given the maintenance of fiscal discipline, the province will prioritize the reprioritisation of budgets, identification of efficiency gains, and making of trade-offs to fund the government priorities. Fiscal discipline requires that governments maintain fiscal positions that are consistent with macroeconomic stability and sustained economic growth.

Furthermore, provincial departments and entities must explore alternative sources of funding to supplement the existing constrained revenue streams and thus enhance fiscal sustainability over the long-term. Partnerships with private sector, donor funding, developmental finance are among the possible alternative funding sources.

The provincial government also views Public Private Partnerships as a key vehicle to not

only deliver infrastructure but for its ability to stimulate the economy, create jobs and deliver projects within cost, time and quality whilst providing the upfront funding for these projects. Therefore, PPPs with revenue raising potential will be prioritised.

As the MEC of Finance and Economic Development, I have emphasised to Gauteng

Provincial Treasury that any approach to the market for funding should be premised on

securing funding to finance strategic infrastructure projects, which have sound economic benefits to the province, create jobs, raise revenue and potentially provide an avenue to pay back the E-Toll debt. This approach is seen as a more sustainable and will prove far more beneficial to the citizens of Gauteng, with far more positive spin-offs than borrowing to pay a debt of E-Toll.

The 2025 Budget will see a conclusion of the national fiscal consolidation strategy

announced in the national 2020 Medium-Term Budget Policy Statement (MTBPS), with

debt‐stabilising primary surplus achieved in 2025/26, a reduction in the fiscal deficit to

pre‐COVID levels and a stabilisation of debts service costs as a percentage of revenue.

Gauteng Provincial Treasury is therefore confident that through the measures and reforms mentioned above, the province will be able to service the E-Toll debt, simultaneously providing much needed services to the citizens of Gauteng, whilst reaping the benefits of the spinoffs of proposed economic infrastructure initiatives.

It is in this context that we would like to assure residents of Gauteng that we will not

compromise our priorities in social services such as health and education.