With the total cost of R229.3 billion, the debt-service costs absorb 15.2% of the government’s main budget revenue. Debt-service costs remain the fastest-growing expenditure item for the government.
Government’s debt to GDP is just over 65% and in the near future, if things remain the same, debt could escalate way beyond the acceptable levels.
During the State of the Nation Address (SONA), President Cyril Ramaphosa admitted that, despite several efforts to stabilise the economy and building the foundations of the economy through various reforms, the efforts have not been enough.
Mboweni has highlighted that debt and debt-service costs will continue to rise over the medium-term.
According to the minister, over and above the current debt, the government has continued to implement an “efficient and cost-effective financing strategy”.
However, indications are that the current debt trajectory is not sustainable, especially considering that the economic growth forecast for the country is set at 0.9% for the medium-term.
Government has made it a priority to ensure a massive reduction in expenditure, which will seek to assist in improving the financial position the state.
In his maiden budget in 2019, Mboweni has said the country was borrowing R1.2 Billion a day. Currently, the countries debt is projected to be R3.56 trillion by the end of 2020/21.
Below is the full Budget Speech delivered by Minister Tito Mboweni.