(Bloomberg) -- South Africa’s National Treasury will use the medium-term budget policy statement in October to outline how it plans to free up 250 billion rand ($14.4 billion) to narrow the fiscal gap from next year, according to the acting head of its budget office.

The Cabinet has agreed to target a primary budget surplus by 2023-24 and actively managing the nation’s finances to ensure government debt stabilizes at 87.5% of gross domestic product in three years. If it fails to do that, debt will exceed 140% of GDP by the end of the decade, the Treasury said in a special adjustment budget last week.

The planned fiscal consolidation would require raising an additional 40 billion rand in tax revenue over the next four years, while cutting spending by 230 billion rand over the next two years. As a start, the Treasury wants to increase tax revenue by 20 billion rand over the first two years and cut expenditure by 90 billion rand next year, Edgar Sishi, the acting head of the National Treasury’s budget office, said in an investor call organized by FirstRand Group Ltd.’s Rand Merchant Bank, and Deutsche Bank.

The consolidated budget deficit will swell to 15.7% of GDP in the year through March 2021, Finance Minister Tito Mboweni said last week.

The impact of the coronavirus pandemic on South Africa’s economy, the government’s poor track record of sticking to plans to trim the budget deficit and debt, and demands from struggling state-owned companies would make it difficult to stabilize debt by 2023-24, ratings companies Moody’s Investors Service and Fitch Ratings said after the emergency budget.

However, Sishi said the Treasury’s success in redirecting more than 100 billion rand for virus support suggests “it is by no means an impossible task to find 90 billion rand next year off a baseline that will be marginally larger than the one we have this year.” That, coupled with the fact that the government has yet to agree to a new public-sector wage deal to replace the current agreement that expires this year. gives it room to maneuver, he said.

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