The country’s increasing level of debt and the costs of servicing it is causing concern amongst legislators and economists alike.
Conservative estimates suggest the national debt could balloon to R3,3 trillion by 2020/2021 financial year. Efforts to stabilise the run-away debt seem to be bearing little fruits.
By 2021, the country might be paying a staggering R214 billion, just in interest on the debt.
Economists say the situation is untenable.
“It’s terrible because it is crowding other expenditure. We are spending 180 billion per year on interest payments, not capital payments,” says Senior Economist at Old Mutual, John Else.
Else says the current fiscal framework is not adequate to deal with the situation. More investment and growth, he says, might just be what is needed.
“We need stronger economic growth to get more people on the jobs, that will start that whole circular effect in terms of economic growth going,” says Else.
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