SA is drowning in debt as Mboweni predicts a R4,5 trillion rise in 3 years

On Wednesday, Finance Minister Tito Mboweni noted that the number one priority in his Medium-Term Budget Policy Statement was to present a credible plan to control national debt -which has climbed up to R3 trillion- and it is expected to rise to R4.5-trillion in the next three years.

The mismanagement of state-owned entities has increased national debt

Mboweni addressed the nation in a frank tone, and laid it all out to hang, as South African’s were no longer privy about the current economic climate, the Finance Minister emphasised that the public wage bill on the mismanagement of state-owned entities (SOEs) needs to be effectively addressed to get the country out of its current slump.

Getting the national debt under control will be a task on its own, as the debt will skyrocket by a staggering R1.5 trillion in the next three years, as South Africa will be spending R299 billion a year, on interest payments.

Mboweni is speculated to make ‘no cuts’ to the R630 billion wage bill

This amount costs more than the basic education which amounts to R262 billion, and more than what is currently spent on healthcare which is estimated to cost R222 billion, the social grants R206.8 billion, and the cherry on top is that the interest alone is nearly triple of what is spent on police services at R104 billion.

“Earlier this week the DA made a credible proposal to cut the wage bill by R168 billion in three years, while protecting frontline service delivery staff like teachers and nurses. All of the cuts he announced will be applied to “non-compensation” spending, with no cuts to the R630 billion wage bill. Effectively, he procrastinated again on the tough action needed to turn our finances around.”

Democratic Alliance

Budget speech: SAA will gain R9 billion for its debt write off

The Minister has announced major spending cuts, which are estimated at roughly R50 billion over the next two years, despite it not being enough to retain the country’s credibility with rating agencies, it will be a start at trying to “fix” the inflating national debt, as data proves that the national debt has increased from 54% of GDP in the 2017/18 financial year to a projected 71.3% of GDP in 2022 financial year.

State-owned enterprises have been at the heart of the national debt crisis, and the budget speech revealed R33 billion allocated for an Eskom life-line and an R9 billion debt write off for the embattled SAA.

“While the basic services on which the public rely are being cut, more money is being spent on failing SOEs. This is an indefensible choice. Further procrastination will have terrible consequences for South Africans, particularly for the poor, as service spending is squeezed out by debt and salaries. We urge the Minister to implement the DA’s proposal to cut the wage bill.”

Democratic Alliance