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.
“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 65.6% of GDP projected in February 2020,” Mboweni said. Most of this surge stems from the revenue shortfall and massive payouts from the Unemployment Insurance Fund. Gross revenue collection for the first two months of the fiscal year was already R-35.3-billion behind target.
“Government will narrow the deficit and stabilise debt at 87.4% of GDP in 2023/24. Cabinet has also adopted a target of a primary surplus by 2023/24,” he added.
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