Finance Minister Enoch Godongwana has announced measures to revive the economy, crack down on crime and corruption, and stabilise public finances.
Godongwana also said the State will be reconfigured, with some of the departments and agencies closed down and others merged with functional ones.
He said President Cyril Ramaphosa will give more details on the reconfiguration of the State later.
They were expecting the economy to grow by 1.4% in the next two years, but they were concerned about the deficit that has increased by R54 billion.
They were projecting it to increase from 4% to 4.9%. This was due to low revenue collection.
Godongwana also announced that they were extending the R350 Social Relief of Distress grant until 2025. This will give government time to develop a review of the social security programme.
Unions and non-governmental organisations have called on the government to implement the Basic Income Grant.
The government was also trying to fix Transnet, which cost the economy R411bn last year because of poor performance.
Godongwana, who was delivering his Medium-Term Budget Policy Statement at Cape Town City Hall on Wednesday, said they are forging ahead with cost-cutting measures.
He said they will save R21 billion in cost-cutting measures this year, and this will rise to R64 billion next year and R69 billion in the 2025/26 financial year.
On the reconfiguration of the State, he said they were working with the Presidency and the Department of Public Service and Administration.
This was to reduce spending in the public service.
“In this regard, the MTBPS also announces that action is being taken to review and reconfigure the structure and size of the State in line with the president’s commitment in the 2023 state of the nation address.
“A joint plan to review government departments, entities and programmes over the next three years is being prepared. This plan will addressing overlapping mandates and functions, including in public entities and ensure that we create standards for more sustainable remuneration of executives that serve public entities receiving transfers from the fiscus,” said Godongwana.
However, Godongwana said they will not compromise on the work done by security agencies, basic and higher education and social development in the delivery of services.
Godongwana said they were concerned about the deterioration of the performance of Transnet.
But they were working on a plan to revive the logistics sector.
“South Africa's logistics system faces significant challenges, such as deteriorating rail performance and inefficient ports. Rail underperformance is estimated to have cost up to 5% of GDP in 2022, with losses in the region of R50bn in the minerals sector alone,” said Godongwana.
He told the media briefing earlier they will be engaging with Transnet in the next three months on its roadmap.
Godongwana also said the electricity sector was being transformed with more players getting into the business.
Deputy Minister of Finance David Masondo also told the media briefing that reforms in the network industries are going to revive the economy.
IOL