Western Cape to tap into reserves to cover R3.2 billion budget shortfall

The Western Cape government is bracing for a R3.2 billion deficit in its 2025/26 budget, as announced by Finance MEC Deidre Baartman during her address in Cape Town on Thursday.

Delivering her budget speech in Cape Town, Baartman said of the province’s R269.524 billion Medium-Term Expenditure Framework (MTEF) budget, R43.789 billion will be allocated for growth for jobs programmes; R3.955 billion for safety; R194.928 billion educated, healthy, and caring society initiatives and R23.439 billion for innovation, culture and governance.

She said the 2025/26 budget will be funded through the R65.376 billion provincial equitable share allocation, R16.268 billion in conditional grants, and R4.457 billion from the provincial revenue.

However, she said the total provincial receipts amounted to R86.101 billion in the 2025/26 financial year and our total provincial payments and provisions amounted to R89.316 billion.

“In order to fund the R3.215 billion deficit we need for the 2025/26 financial year, we will finance this budget deficit from our accumulated provincial reserves,” Baartman said.

The budget in the next two years will be supplemented with R1.584 billion in 2026/27 and R796.832 million in 2027/28 from their provincial reserves in order to maintain stability in service delivery while navigating fiscal pressures, Baartman added.

She noted that no consensus has been reached on the national Budget recently tabled by Finance Minister Enoch Godongwana in Parliament amid opposition to the proposal on VAT increase.

Baartman said while the national fiscal framework was being developed and the various bills were processed by Parliament, they hoped amendments would follow.

She, however, maintained that increasing VAT was not the solution.

“We are disappointed that the national government has avoided the difficult, growth-enabling decisions. Our focus must remain on accelerating economic reforms, eliminating wasteful expenditure, and reprioritising spending, especially as provinces bear the burden of sustaining critical frontline services like health, education, and social support without overburdening residents.”

Baartman assured the Western Cape residents that the provision of services in the provincial government would not come to standstill if the national Budget was not adopted.

“You will still access education and health. Our officials and employees will still be appointed. Our government will not stop, we will continue.

“The doors of the Western Cape government will remain open regardless of whether national passes the Budget or not,” the Finance MEC said.

Tabling her budget, Baartman noted that the country’s economic performance has been lackluster and faced further pressures with the withdrawal of USAID funds, imposing an additional burden on the finances to the detriment of the most vulnerable groups.

“These pressures are compounded by the risks and economic implications of losing the African Growth and Opportunities Act (Agoa) for South Africa, especially for agriculture, automotive and textile industries which benefit from duty-free access to the United States market.”

She said the Western Cape continued to demonstrate economic strength, resilience, and responsible governance. 

Baartman also said the province’s 2025/26 budget reflected a careful calibration of fiscal pressures that were designed to grow the economy for job creation and protect the frontline services.

The Provincial Treasury allocated R45.382 million towards Red Tape Reduction initiatives to the Department of Economic Development and Tourism.

“We will collaborate with Transnet to streamline the Port of Cape Town’s operations, develop a digital cargo planning platform, resolve logistics bottlenecks, and encourage private sector involvement in the container logistics chain.

“Reducing congestion could drive R5.6 billion in economic growth and create 20 000 jobs over the 2025 MTEF.”

Baartman also said the provincial government will spend R30.879 billion on 924 infrastructure investments with the biggest investments in roads and education.

The MEC said her department has allocated R3.955 billion to safety programmes over the MTEF.

“These funds are directed towards reinforcing law enforcement, crime prevention, and community-based safety initiatives.”

At least R96.650 million will be spent to combat gangsterism by supporting the Provincial Joints Anti-Gang Priority Committee.

 Baartman stated that the halting of the President's Emergency Plan for AIDS Relief funding will result in a R405.2 million funding shortfall for health services in the Western Cape.

“The Western Cape Department of Health and Wellness will, however, not leave vulnerable patients in the lurch. 

“Measures to protect the people of the Western Cape include assessing the feasibility of absorbing critical services, and seeking alternative funding sources to mitigate the financial and service delivery risks of the halting of this programme.”

Brett Herron, GOOD Party Member of the Provincial Legislature, rejected Baartman’s claim that the budget was tabled with every line item representing “allocative efficiency”.

Herron said the DA-led province continued to back the ineffective safety plan, which he described as a political vanity project.

“Using the concept of ‘allocative efficiency’ this plan should be scrapped and the funding invested in projects and programmes that would have more impact on reducing crime, better housing, better social services, youth employment programmes, and better education,” Herron said.

mayibongwe.maqhina@inl.co.za