National Treasury says a judicial commission of inquiry will be established to look at the root causes of the revenue gap.
This after global ratings agency Standard & Poor’s Global Ratings downgraded South Africa’s currency to junk status.
The move will make it costly and difficult for the country to raise debt in local currency.
The decision saw the rand shedding 25 cents to the US dollar.
Another rating agency Moody’s spared the currency from larger sell-off by placing South Africa on review for a downgrade.
In a statement released just before midnight, S&P said the downgrade reflects further deterioration of South Africa’s fiscal position.
Treasury responded, saying that the 2018 Budget will outline decisive policy measures to strengthen the fiscal framework.
However, S&P believes that these may be insufficient to stabilise public finances in the near term.