The country’s debt continues to grow at a faster pace than the economy, leading to the state spending more money paying off loans than on frontline services such as health, policing and education.
Delivering his maiden Budget speech in parliament on Wednesday, Finance Minister Enoch Godongwana revealed that the country’s sovereign debt has reached R4.3-trillion and is projected to rise to R5.4-trillion over the medium term.
“Our debt burden remains a matter of serious concern,” said Godongwana, noting that government was now focusing on restoring the health of the public finances by addressing the fiscal imbalances.
The “huge sum” that South Africa was owing in debt costs large debt-service averaging R330-billion annually over the medium term.
This means while government is projected to collect R1.5-trillion, R330-billion will go to servicing debt and another significant portion going to paying public servants.
“These costs are larger than spending on each of health, policing or basic education. For this reason and to support the economic recovery, in this budget we are reducing the fiscal deficit and stabilising debt.”
The borrowing requirement decreased by R135.8-billion this year.
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