South Africa: 24 Billion Reasons Why Government Needs to Worry About Its Debt

opinion

The 'extra interest' on government's debt is rising rapidly and astronomically, caused, in large measure, by its bailouts of Eskom and SAA. That's the bad news. The good news is that there was a glimmer of hope this week.

R13.4-billion. That is the extra interest costs the government is paying solely due to the rising riskiness of government debt. Without action, that number for extra interest is scheduled to rise to R24-billion next year.

Let's be clear: this is not the interest cost. That number will be close to R210-billion next year. This extra interest is also not directly due to the larger amount of debt the government has had to issue. This is solely due to the higher interest rate South Africa is being charged because it cannot get the country's finances under control.

The good news is that in the last week there has been some progress in dealing with the problematic state-owned enterprises. South African Airways is holding the line on its current wage dispute with unions. This resulted in flight cancellations - and a fair bit of acrimonious language from the unions.

However, unlike the collapse to union demands we saw during last year's Eskom wage...

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