‘R6 billion in the red’; Gauteng could face bankruptcy by 2025 amid e-tolls debt

Gauteng could face bankruptcy by 2025 if the provincial government doesn’t exercise caution with its finances.

This is according to Finance and Economic Development MEC Lebogang Maile.

Maile held a media briefing on Wednesday regarding Gauteng’s finances and the audit outcomes of the 2023/2024 financial year.

Gauteng bankruptcy?

The MEC sounded the alarm over Gauteng’s finances, warning that the provincial government could be on the verge of collapse.

However, he reassured that the public’s finances “were in good hands”.

“If we are not vigilant and we are not careful, the Gauteng government could be bankrupt by next year; it could be R6 billion in the red if we are not careful.

“But I don’t know; as I said, the public funds are in good hands, and we are looking at balancing all of that to make sure that we don’t have problems,” Maile said on Wednesday.

Audit outcomes

The MEC disclosed that seven out of Gauteng’s 14 provincial departments, including Economic Development, achieved clean audits.

However, five departments – Health, Human Settlements, Social Development, Roads and Transport, and Sports, Arts, Culture, and Recreation – received unqualified audit opinions with findings indicating non-compliance with supply chain regulations.

“[These departments] have a challenge with consequence management indicating that recommendations from the completed investigations have not been implemented.

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“In addition to this, material misstatements in annual financial statements are an issue in eight of the provincial departments.

“This indicates weak internal controls and a lack of adequate management reviews in the financial reporting process,” he explained.

Maile expressed concern over the performance of the provincial Department of Health, noting that the government plans to strengthen internal controls and enhance consequence management.

“We firstly want to make sure that we improve efficiencies in health. We are going to be working with them to make sure that we get value for money for every service that we provide.”

pic.twitter.com/0hIxRcWz9u

— Gauteng Treasury (@GautengTreasury) September 25, 2024

E-tolls debt

Maile also revealed that the e-toll debt has placed significant financial pressure on Gauteng’s budget.

He stated that the provincial government was required to pay R20 billion towards the e-toll debt owed to the South African National Roads Agency (Sanral), with the first installment of R3 billion scheduled for payment on Monday.

“This R20 billion, R12 billion is the debt, R4 billion is the interest and another R4.1 billion for the maintenance,” the MEC said.

E-tolls were officially scrapped by the provincial government on 11 April.

READ MORE: Gauteng to use new revenue strategy to tackle R17 billion Sanral debt

This meant road users would no longer be charged for the use of the controversial Gauteng Freeway Improvement Project (GFIP) electronic tolling gantries.

The gantries and their cameras will, however, remain operational and be repurposed to assist road safety and crime-fighting initiatives.

In addition, motorists will still have to pay their historic debts as required by law.

The Gauteng government needs to pay R12.9 billion of e-toll debt the Sanral incurred to build the road infrastructure as well as deal with the backlog of maintenance and rehabilitation of the network.

The National Treasury will foot the remaining 70% of R43 billion.

Gauteng budget cuts

Meanwhile, Maile further addressed the impact of national budget cuts on Gauteng.

The MEC noted that the province’s budget was expected to shrink, with a reduction of R15 billion in the short term and up to R35 billion over the next five years.

“Apart from the R20 billion of e-tolls, there’s R15 billion that has been cut on our budget because of budget cuts at a national level. So in these five years, our budget is R35 billion less… that’s what we are dealing with.”

The provincial government was allocated a total of R165.8 billion for 2024/2025.

Former Gauteng Finance MEC, Jacob Mamabolo previously indicated that the Gauteng budget will grow to R171.5 billion in 2025/2026 and to R176.8 billion in 2026/2027.

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