South Africa sees government debt exceeding 100% of GDP

South Africa’s debt levels will exceed 100% of gross domestic product by 2024-25 and rise to almost 114% by 2028-29, according to a document presented by finance minister Tito Mboweni and seen by Bloomberg.

Mboweni made the presentation to the National Economic Development and Labour Council on Friday, according to posts on his Twitter and Facebook pages.

It shows gross government debt will rise to 80.5% of gross domestic product in this fiscal year, compared with a projection of 65.6% in February, Bloomberg said.

The trajectory presented shows no sign of stabilizing by 2028-29.

Mboweni is due to present a special adjustment budget that will reflect the devastation wrought on the economy by the coronavirus as well plans to fund a R500 billion ($28.85 billion) stimulus package June 24.

The Board of Directors of the New Development Bank (NDB), meanwhile, has approved a Covid-19 Emergency Program Loan of $1 billion to the Government of the Republic of South Africa.

“The Covid-19 Emergency Program Loan to South Africa will be provided in response to the urgent request and immediate financing needs of the South African Government.

NDB’s assistance will address urgent health needs in South Africa to overcome the Covid-19 pandemic and help mitigate socio-economic impacts on the most vulnerable populations,” said Xian Zhu, NDB VP and chief operations officer.

“Such focus of the Bank’s financing is in line with the emergency loans provided by the NDB to China and India earlier this year.”

The Loan will assist the South African Government in rolling out its healthcare response to the Novel Coronavirus Disease-19 and in providing a social safety net to alleviate the economic impact of the disease containment measures on vulnerable individuals.

The Program envisages preventing, detecting and responding to the health threat posed by Covid-19, and providing social grants to vulnerable groups affected by measures implemented to prevent and contain the disease.

Read: Further job cuts could put strain on South Africa’s coronavirus financial support: fund commissioner