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Cape Town - Treasury is certain that the wage agreements that will cost SA R63.9bn over three years can be accommodated within the current expenditure limits.
In a written response to Parliament on Monday, Finance Minister Nhlanhla Nene said “contingency reserves will play a role in accommodating higher compensation budgets this year, and so will resources available due to projected underspending”.
Some reprioritisation from other budget lines will also be required, he explained.
Nene was responding to a question by Democratic Alliance MP David Maynier two days before his mini budget speech in Parliament.
Maynier challenged Nene to not deliver a business-as-usual budget speech on Monday, but warned that the finance minister will battle to narrow the budget deficit, stabilise public debt and rebuild fiscal space.
Nene said he will make an announcement during his mini budget about how costs of the public sector wage agreement will be financed.
A pay deal for public servants has increased the government's wage bill from R412.7bn to R466.8bn over three years, challenging Treasury's ability to stop state spending.
Of the R63.9bn amount, R41.5bn is for cost of living adjustments, R11.1bn is for medical assistance and R11.4bn is for housing allowance, Nene told Parliament on Monday.
“Line departments at national and provincial level are being engaged to assess the magnitude of shifts required for reprioritisation,” he said.
“National Treasury is certain that the agreements can be accommodated within the current expenditure limits,” he said.
