South Africa: The Bitter Aloe Test - SA Is Drowning in Debt

South Africa's Finance Minister Tito Mboweni delivers his medium-term budget policy statement on October 30, 2019.

On Budget Day 2019, Finance Minister Tito Mboweni presented a bitter Aloe Ferox plant to President Cyril Ramaphosa. It signified the resilience of the South African economy, which had withstood a long, cold winter. The reality is that winter has not abated and even hardy aloes, left untended, will wither and die.

South Africa's debt is on an unsustainable trajectory and there are few visible plans in place to check it.

In the 2018/19 financial year, South Africa's national debt exceeded R3-trillion. It is expected to rise to R4.5-trillion in the next three years.

Put differently, the debt to GDP ratio will jump from 56.7% in 2018/19 to 71.3% in 2022/23 unless policies are put in place to arrest this. Without these measures, this figure will continue to grow, at the same rate.

This means that between 2020/21 and 2022/23 government will spend R796-billion servicing debt, that is more than R1-billion a day and is more than the health budget over the same period.

This threatens the government's ability to maintain existing levels of service provision and infrastructure investment.

"Clearly, we need to do things differently," Finance Minister Tito Mboweni said in his presentation of the Medium Term Budget Policy...

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