South Africa's debt levels will surge during 2020 as the economy contracts over 7% in the face of the Covid-19 pandemic, said Finance Minister Tito Mboweni in his supplemental Budget speech on Wednesday, 24 June. But he vowed to avoid a sovereign debt crisis, which he pointedly warned was looming on the horizon.
Finance Minister Tito Mboweni looked sombre, even ashen, as he stood before the podium on live TV waiting for apparent technical glitches to get sorted just before he delivered his emergency Budget speech. Small wonder, given its contents.
The big numbers that the markets were looking for were the revisions to the projected debt-to-GDP ratios for the Budget deficit and the overall levels of debt, and they were shocking.
The Budget deficit for the 2020/21 financial year is now seen hitting R-761.7-billion, or 15.7% of GDP. This compares to the R-370.5-billion, or 6.8% of GDP, forecast in the February 2020 Budget - a more than doubling of a number that was already very worrying.
"Our early projection is that gross national debt will be close to R4-trillion, or 81.8% of GDP by the end of this fiscal year. This is compared to an estimate of R3.56-trillion or...