Stats SA has published a new report looking at how government spending has changed over 13 years, and focusing on how much the country pays to service its debt.
If state expenditure is taken as a measure of better times, there was a three-year period (2005/6 to 2008/9) when government1 spent less than it earned, enjoying a surplus over that period, the organisation said.
However, it noted that this quickly shriveled under the strain of various factors – including the 2008–2009 global financial crisis.
“The economy floundered in 2008/09, sliding into recession for three consecutive quarters. Government revenue fell in 2009/10, mainly underpinned by a fall in tax collected from businesses,” Stats SA said.
“Revenue bounced back the following year, but not enough to lift government out of the red. Since 2007/08, government has consistently spent more than it earns.
“The deficit in 2016/17, for example, amounted to R156 billion,” it said.
According to Stats SA, a national budget deficit is not uncommon globally and should not automatically be seen in a negative light.
Countries generally borrow money to cover fiscal deficits so that they can provide services to their citizens, it said.
“South Africa’s gross loan debt stood at R2.2 trillion in 2016/17, according to the National Treasury. This translates to about R40,000 per person living in the country.
“Servicing this level of debt can be expensive. Interest payments accounted for 9.2% (or R146 billion) of general government expenditure (R1.58 trillion) in 2016/17,” it said.
In other words, for every R100 of total spending, R9,20 was used to pay interest on debt.
“This is more than what was spent on the hospital (R105 billion), tertiary education (R77 billion) and housing (R69 billion) functions during that period,” Stats SA said.
National Treasury expects this figure to rise, reaching 13% of total expenditure in 2021/22, Stats SA said.
South Africa devoted a larger proportion of its budget to paying interest than other countries such as Russia and China, according to data from the International Monetary Fund (IMF).
Of the 109 countries for which data are available, Lebanon, Sri Lanka, Jamaica and Brazil devoted the highest proportion of their respective budgets to interest payments in 2016.
Zambia was ranked in 5th place, an indication of the country’s rapidly expanding debt burden. South Africa was ranked in 30th position.
South Africa has a higher interest payment burden than some of its neighbours. Namibia, Botswana and Lesotho all contribute proportionally smaller chunks of their budgets to service debt.