Finance Minister Tito Mboweni has said if no drastic changes are made to curb excessive government spending, South Africa could find itself in a sovereign debt crisis by 2024 and be forced to approach institutions like the International Monetary Fund (IMF).
Mboweni addressed a virtual sitting of the National Council of Provinces on Thursday where the 2020 Appropriations Bill was debated.
"I say this with a very painful heart. The devastation in the economy has resulted in major tax revenue weaknesses," Mboweni said.
"We are much, much poorer and therefore all of us have to adjust our expectations. We can longer spend the way we were spending before. We can no longer do things we had hoped to do. The situation has radically changed."
Mboweni again pointed to the zero-based budgeting system to curb unnecessary spending.
"Allocating funds according to our revenue base, avoid as much as possible borrowing to fund the gap and live within our means. If we don't do this, by 2024 this country will be in a situation where the debt to gross domestic product (GDP) ratio [will be] higher than the GDP of the country," Mboweni said.
"In simple technical economic terms that means we are going to be in sovereign debt crisis. That would mean we are unable to fund our budget and therefore we will be forced to go to the IMF, who will take over our country, the public service, pensions and do all kinds of structural reform programmes.
"A sovereign debt crisis is a serious matter and we are looking at it in the eye by 2024 if we do not redo our budget, if we don't manage our house finances."
Mboweni called on MPs to support government's effort to balance the books as the nation awaits his much-anticipated emergency budget, which will be tabled on 24 June.
In April, President Cyril Ramaphosa announced government would provide R500 billion in fiscal support to be directed to Covid-19 priorities.
Of this amount, R130 billion would be reprioritised from the national budget tabled in February.
The National Assembly passed the Appropriation Bill last week.
The Appropriation Bill proposes major budget baseline expenditure reductions and the reprioritisation of funds in line with the government's proposed fiscal consolidation policy through a total of R66.045 billion reductions in the budget baseline.