SA in a debt crisis says economist

 According to SABC News, Professor Peter Baur, an economist, said that South Africa’s debt to GDP ratio can increase by up to 70%. Enoch Godongwana, the minister of finance, will announce measures to bring the growing debt under control on Wednesday. 

ALSO READ: YASIS: South Africa needs R2-billion a day to pay its DEBTS

GODONGWANA’S MEDIUM TERM BUDGET POLICY STATEMENT

Godongwana’s medium-term budget policy statement will be announced in Parliament on Wednesday, 01 November. This statement sets government policy goals and priorities and outlines spending and revenue estimates. He has indicated that spending cuts and increased borrowing can be expected. Godongwana is expected to try to find a balance between the growing spending needs and the weaker streams of revenue.

ALSO READ: Fate of SASSA SRD grants to be decided on 1 November 2023

WHY IS THE GOVERNMENT BORROWING MONEY?

According to Baur, the SA government borrows money to fund its projects and this debt must be paid back. This, in turn, means that money originally allocated to other causes or projects, is used to repay this debt. “Currently our debt to GDP is extremely high … The challenge we have with borrowing large amounts of money in order to invest, is that this debt has to be repaid and that means that we’re going to be taking money away from our fiscus, from our bucket of money we could be using for other things, to actually fund this debt,” said Baur.

ALSO READ: South African’s DEBT levels are at an all-time HIGH

GRIM FUTURE AHEAD

Godongwana warned that a bleak future is on the cards for South Africa and cautioned that forthcoming repayments could lead to a depletion of all available government funds by the end of March 2024. Stanlib chief economist, Kevin Lings, thinks that a crisis is not on the horizon quite yet. “We are very clearly heading towards a fiscal crisis. Are we there yet? No. We have still got the ability to rein it in, to reverse it, to rectify it,” he said.

ALSO READ: SASSA grant MADNESS: What you should know

CLICK HERE TO READ MORE ARTICLES BY MARZANNE JANSE VAN RENSBURG