CAPE TOWN – Finance Minister Tito Mboweni said if the government failed to act now, the national debt would likely exceed 70% of GDP by 2022.
The debt to GDP ratio is currently at close to 60%, with the minister warning that the persistent gap between revenue and expenditure would push it even higher over the next ten years.
Delivering his Medium Term Budget Policy Statement (MTBPS), Mboweni said ideally, the national debt should be 30% or lower.
However, the reality is that the debt is growing at an unsustainable pace – with debt service costs among the top two fastest-growing areas of spending – costing the country R204 billion this year.
Mboweni addressed reporters shortly before he presented the MTBPS.
“Once the debt to GDP level breaches the 60% level, we should be concerned. Ideally, the GDP should be around 30% or lower or zero.”
The statement showed that since the global financial crisis in 2008, the government had run large deficits which led to the rise in borrowing.
It further stated that while this provided some support to the economy, it had put the country in a precarious position by crowding out social and economic spending programmes.
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