5 December 2018

South Africa: Public Representatives Must Be Held Accountable for Government Debt

analysis

The mounting debt relating to South Africa's state-owned entities is reflective of a wider problem in sub-Saharan Africa. Government borrowing in the region is spiralling out of control - and the public is being kept in the dark as to the extent of the debt burden.

Last week, power utility Eskom released its financial results, which showed that interest on its massive R400-billion debt has now reached R45-billion. This has crippled the company and now threatens the country's economic growth through rolling power cuts.

Other SADC countries could face the same quagmire. All governments borrow money to finance their domestic economic objectives. The question is whether this borrowing is for recurrent expenditure, or for investment in expanding economic growth.

If this debt accumulation does not translate into improving the country's growth potential, it can become self-defeating and set the country in a cycle of debt unsustainability. This happens when countries end up needing to raise additional resources to service their...

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