Unfortunately, the release of the Medium-Term Budget
Policy Statement on the 1st of November, provided us
with a rather bleak outlook for SA’s long-term debt
trajectory. Lower tax revenues (primarily due to lower
commodity prices) coupled with higher debt service
costs and wage settlements increased the budget deficit
for FY 23/24 to 4.7% from 3.9% earlier in the year.
Even with rosy GDP growth numbers being factored in by
National Treasury, the level of debt to GDP is now
expected to plateau at just under 78% in 2026. We’re now
spending 20c on interest costs out of every R1 raised
from tax revenue.
Like many other countries, including the US, these debt
dynamics are just not sustainable.