Could Gauteng really go bankrupt in 2025?

The Gauteng government is looking to avoid a financial “day zero”, but questions remain about whether the province could truly face bankruptcy next year.

Several months ago Finance and Economic Development MEC Lebogang Maile warned that Gauteng could find itself “R6 billion in the red” by June 2025 if urgent financial caution isn’t exercised, following R15 billion in budget cuts.

Maile pointed to the Gauteng Department of Health as the primary driver of the province’s financial troubles.

ALSO READ: Severe budget cuts put Gauteng hospitals at risk, DA warns

The MEC highlighted the department’s persistent non-compliance with supply chain regulations as a critical threat to Gauteng’s overall financial stability, citing corruption as the root cause of the crisis.

Despite these challenges, Maile assured the public that the provincial government was taking every possible measure to steer clear of bankruptcy.

Gauteng bankruptcy

Speaking to The Citizen, political analyst Levy Ndou said there are concerns that the immense strain the health department is putting on the budget could force local government to realign its priorities.

“What I foresee is that the greater portion of the budget will have to focus on the issues relating to health and if you listen to the State of the Nation address by the president over the years, not only Ramaphosa and other presidents before him, they’ve always put an emphasis on health as one of the priorities.”

Ndou said that the government has to improve the health sector, which will require a lot of money.

“On that basis, the government has to find ways and means to ensure that the health sector is properly serviced. At the same time, they should be able to create a balance with other departments that also require their attention,” he added.

Not a surprise

In a recent interview with broadcaster Newzroom Afrika, Professor of Sustainable Development at Stellenbosch University Mark Swilling said Gauteng’s bankruptcy warning came as no surprise, as the province’s financial troubles have been brewing for years.

Swilling pointed out that Gauteng was at a point where bailouts from the national government may no longer be a viable solution.

READ MORE: R37.2bn set aside to steer Gauteng economy towards growth

Although Maile maintained that Gauteng was well-managed, the professor is sceptical.

“I find it hard to believe that he expects people listening to him to be rest assured that Gauteng is well run.

“We have known for several years that that is not true, especially concerning certain key departments like the Department of Health, so what we need is a lot more than platitudes,” Swilling said.

He emphasised the need for tangible interventions, such as addressing corruption by removing those benefiting from graft, to rebuild public trust.

Debt default?

Swilling warned that if Gauteng were to go bankrupt, the national government would face a debt default — something the country simply cannot afford.

“Our provincial governments are not really fully fledged governments.

“They don’t have their own tax bases, they are dependent on transfers from the national tax base via the national budget and the large majority of their funds get spent on social welfare, health and education.

“Those three are the big expenditure [items] and there are equivalent national departments for those services,” the professor explained.

“So the worst comes to worst is if the provincial government does collapse, which technically I can’t see how that works [because] there are national departments that step in.

“We maybe need to read between the lines of what’s going on here [and ask] is this, for example, the provincial government trying to force the national government to step in and save them,” Swilling added.

NOW READ: Gauteng budget: ‘Our strategy is to grow the economy,’ says Maile amid ‘deep fiscal constraints’