Finance minister Tito Mboweni painted a bleak picture of SA’s ballooning debt as he announced a massive cash injection into embattled state-owned entity (SOE) Eskom. The debt to GDP ratio, which compares the country’s sovereign debt to its economic output for any given year, has increased 0.2 of a percentage point from the medium-term budget policy statement in October. The budget deficit is projected to narrow from 4.2% of GDP in 2018-2019 to 4% in 2021-2022. Gross debt is expected to stabilise at 60.2% of GDP in 2023-2024. This is a huge jump from 27.8% in 2008, before the global financial crisis. “Weak economic performance and residual problems in tax administration have resulted in large revenue shortfalls. The deteriorating financial position of state-owned companies has put additional pressure on the public finances,” the Treasury said.

In response, the Treasury has proposed a reprioritisation of expenditure and tax measures to contain the budget deficit and stabilise de...

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