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<\/a><\/figure>\n\n\n\nEconomists are already flagging South Africa’s deteriorating debt situation, with Efficient Group’s Dawie Roodt highlighting in August that, on a per capita basis, every person in South Africa owes as much as R70,000 in debt accrued by the government.<\/p>\n\n\n\n
South Africa\u2019s fiscal deficit for 2023 is set to be between 6% and 6.5% of gross domestic product (GDP), much higher than the minister\u2019s expected 4% -and Treasury wants to stabilise South Africa\u2019s debt level at 70% of GDP, it has already increased to 72%.<\/p>\n\n\n\n
Farzana Bayat, portfolio manager at Foord Asset Management, noted that, in 2006, the country\u2019s total debt was a modest R500 billion. By 2011, this had doubled to R1 trillion before quadrupling to R4.7 trillion by 2022.<\/p>\n\n\n\n
In nominal terms, the country owes around R5 trillion – and this will reach R6 trillion by 2025.<\/p>\n\n\n\n
The country’s debt crisis is very much in the spotlight at present because the National Treasury has reportedly admitted that South Africa has hit its limit<\/strong><\/a>.<\/p>\n\n\n\n With a widening budget deficit due to lower revenue and tax collections – and government spending accelerating beyond the budgeted limits, the country has few options to close the gap.<\/p>\n\n\n\n Either Treasury has to collect more money from a tax base already under incredible pressure, cut spending ahead of what is expected to be a hotly contested national election in 2024, or it will have to draw up even more debt.<\/p>\n\n\n\n None of the options are palatable or easy for those in charge.<\/p>\n\n\n\n Business interest group Sakeliga this week said that the situation is a desperate one for the government, and warned that it could see politicians lean into destructive policies that put the entire state at risk<\/strong><\/a>.<\/p>\n\n\n\n It said the only option to turn things around is for Treasury to cut government spending by 20-30%.<\/p>\n\n\n\n For its part, Treasury has reportedly compiled a draft proposal to implement austerity measures across government – including hiring freezes and putting new projects on ice. However, president Cyril Ramaphosa has alluded to an opposite stance on this<\/strong><\/a>.<\/p>\n\n\n\n Other opponents of budget cuts have leaned into the option of boosting revenue collection, floating measures such as implementing a wealth tax, hiking taxes on upper-income brackets and adjusting company tax to meet the shortfall.<\/p>\n\n\n\n
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