Eastern Cape taps reserves to manage R2.7bn budget gap

The Eastern Cape government will draw R2.7bn from its reserves over the next three years to help manage growing spending pressures. This will also help protect frontline services.

Finance MEC Mlungisi Mvoko made the announcement when he delivered his 2026/2027 budget speech in Bhisho on Friday.

The R105bn Eastern Cape budget includes:

• R86.5bn from the provincial equitable share;
• conditional grants worth R16.6bn; and
• R1.8bn from provincial own receipts.

The province’s own receipts are generated from transport licences, fees, rent from state properties and licences for liquor and gambling.

“Provincial payments are projected at R104.9bn, with transfers from national government totalling R103.2bn, resulting in a deficit of R1.7bn for the year.

“We have, however, used the province’s own revenue of R1.8bn to cushion the deficit.

The fiscal picture we have painted here calls for the Eastern Cape government to strengthen its own provincial revenue strategy, which will expand resources, improve service delivery and underpin our broader agenda for inclusive economic growth and sustainable job creation

—  Mlungisi Mvoko, Eastern Cape finance MEC

“Over the medium-term expenditure framework, the province will also utilise R2.7bn from the provincial revenue fund (reserves) to support critical spending pressures while protecting frontline services.

The province has repeatedly withdrawn from its reserves over many years.

He said the province will lose more than R2.2bn of its equitable share over the medium term due to national data updates. “This may have negative implications for allocations to departments over the medium term.

“While we support the ongoing review of the equitable share formula, we have, however, raised concerns with the Treasury about the use of Mid-Year Population Estimates, which appear to underestimate the Eastern Cape’s population compared with census data, a situation that results in unfairly reduced allocations. The discussions aimed at finding amicable solutions to the issue are ongoing.

“The fiscal picture we have painted here calls for the Eastern Cape government to strengthen its own provincial revenue strategy, which will expand resources, improve service delivery and underpin our broader agenda for inclusive economic growth and sustainable job creation.”

He said revenue enhancement measures will include a digital end-to-end billing system, strengthened co-ordination with the Road Accident Fund and medical schemes, and revenue pledges signed by departments.

He encouraged departments to intensify revenue collection efforts to achieve a better balance between revenue and expenditure.

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