Finance Minister Enoch Godongwana says the government will borrow an average of R553 billion per year over the medium term as a result of rising budget deficits. Delivering the mid-term budget this afternoon, Godongwana announced that government debt will rise from R4.8 trillion in 2023/24 to R5.2 trillion in the next financial year.
“By 2025/26, it will exceed the R6 trillion mark. We now expect gross government debt to stabilise at 77 % of GDP by 2025/26. This is higher than the level we forecast in February. Over the next three years, debt-service costs as a share of revenue will increase from 20.7 % in 2023/24 to 22.1 % in 2026/27,” says Godongwana.
The Minister says the interest on the debt to around R385.9 billion in 2024.
Government spending
The government has revised down its spending by R21 billion.
Further reductions of R64 billion in 2024/25 and R69 billion in 2025/26 are proposed. The implications of these adjustments will be partially offset by departments implementing the cost containment guidelines issued by the National Treasury.
Sectors including health, education, and police services will be receiving additional funding.
“R24 billion this year and R74 billion over the medium term will be used to fund the 2023/24 wage increase and the associated carry-through costs in these sectors.”
