South Africa is in a debt crisis: Economist

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Economist Peter Baur says South Africa is in a debt crisis with the country’s debt to GDP ratio expected to increase to about 70 percent.

This comes as Finance Minister Enoch Godongwana prepares to table his Medium-Term Budget Policy Statement (MTBPS) for delivery on Wednesday.

Godongwana is expected to try to balance the growing spending needs against weaker revenue streams.

Professor Baur says government currently needs to borrow money to fund projects.

“We’re in a little bit of a debt crisis, in a sense that we need to borrow in order to fund our projects and currently our debt to GDP is extremely high. So, we are sitting at approximately 67 percent debt to GDP but we’re expecting that to increase to approximately over 70 percent, especially going into 2024. The challenge we have with borrowing large amounts of money in order to invest, is that this debt has to be repaid and that means that we’re going to be taking money away from our fiscus, from our bucket of money we could be using for other things, to actually fund this debt.”

VIDEO | Previewing MTBPS with Prof Peter Baur: