We are not made of money, Mboweni warns MPs on debt
- Minister Mboweni told Members of Parliament that there were improvements in the fiscal outlook but said now was not the time for complacency.
- According to the Budget Review, debt-service costs were higher than the 2020 Budget estimates by R3.6 billion in the 2020-21 financial year.
- The Budget Review expects debt-service costs to continue their increase at an annual average rate of 13.3%, reaching R338.6 billion in the 2023-24 financial year.
Minister of Finance Tito Mboweni said in as strong terms as ever that South Africa will have to come to grips with its debt in the coming years as he tabled his 2021 Budget Speech in Parliament on Wednesday afternoon.
The Budget Review said debt-service costs were higher than the 2020 Budget estimates by R3.6 billion in the 2020-21 financial year, R11.3 billion in the 2021-22 financial year and R17.9 billion in the 2022-23 financial year.
Mboweni urged that while there were discernible improvement in the fiscal outlook, it would be a fatal mistake for government to allow complacency to set in.
"An incorrect notion has taken hold that government is 'swimming in cash'. Certainly, compared to last October, we are in a better place. But our assessment from the Supplementary Budget in June last year still stands: our public finances are dangerously overstretched," said Mboweni.
Mboweni said South Africa's borrowing requirement will remain well above R500 billion in each year of the medium term despite the modest improvements in our fiscal position.
"Consequently, gross loan debt will increase from R3.95 trillion in the current fiscal year to R5.2 trillion in 2023/24. We owe a lot of people a lot of money. These include foreign investors, pension funds, local and foreign banks, unit trusts, financial corporations, insurance companies, the Public Investment Corporation and ordinary South African bondholders," Mboweni said.
It expects debt-service costs to continue their increase at an annual average rate of 13.3%, reaching R338.6 billion in the 2023-24 financial year.
"Due to the higher budget deficit, coupled with fluctuations in interest, inflation and exchange rates, debt-service costs will continue to rise over the medium term," the Budget Review said.
The Budget Review said gross national debt was projected to grow continuously over the long term, despite 2020 budget proposals to reduce expenditure growth. The review said strategies to contain debt would be monitored regularly by the minister.