South Africa plans to raise borrowing

South Africa’s Finance Minister Enoch Godongwana says he will "bump up borrowing" to soften the blow of budget cuts when he tables the medium-term policy statement on Wednesday. Speaking at the Kgalema Motlanthe Foundation Inclusive Growth Forum in the Drakensberg on Friday evening, Godongwana painted a dire picture of the state of public finances, and said that if nothing was done about public debt, South Africa would have no cash by the end of March next year.South Africa has about R4.3 trillion of debt and spends 18c of every tax rand collected on debt service costs. Godongwana said SA had been hit by a triple whammy of falling revenue due to low growth, a rising cost of borrowing, and the dumping of South Africa government bonds by foreign investors. Said Godongwana: "The problem with debt is not its size, it is the capacity of the economy to service it. In this environment, our capacity to service it is constrained. And what complicates things is that we have to redeem old debt. This year alone, the amount we are going to redeem is such that if we don’t do anything, we won't have cash by the end of March. Am I scaring you too much? We have to cut expenditure and increase borrowing."ElectionGodongwana's plan to make budget cuts in an election year has come under fire in the ANC. "They call me Mr Austerity, I don't like it, but I can live with it," he said. He said the proposed budget cuts would be smaller than the amount by which government typically underspends on its budget. In the last financial year, state departments underspent by R28 billion. In the previous year, underspending amounted to R31 billion. Two of the biggest factors weighing down debt are load shedding and the deteriorating logistics capacity which is constraining mining exports. The government had made the mistake in the past by focusing on fixing Eskom when what was needed was to fix the electricity supply system. The same mistake should not be made with Transnet, said Godongwana. Transnet's new turnaround plan involves a request for an R47-billion capital injection and R61 billion of debt relief. Rather than focusing on fixing Transnet, the government should focus on getting products to the ports, he said.-Fin24

South Africa plans to raise borrowing

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Republikein 2026-02-18

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South Africa plans to raise borrowing

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