Carol Paton Editor at Large

Financial support for Eskom by the government is the reason behind the rising debt-to-GDP ratio, treasury director-general Dondo Mogajane told parliament’s joint finance committee on Thursday. The national budget, which was tabled in parliament on Wednesday, allocated R23bn a year for the next three years to Eskom to assist it with servicing its debt. The support is anticipated to continue over 10 years, amounting to a total of R150bn, although this may vary depending on Eskom tariffs, electricity demand and economic growth. A year ago, the Treasury said that SA’s debt-to-GDP ratio was projected to stabilise at 59.6% in 2023. This has now been pushed higher with debt projected to stabilise at 60.2% in 2023.

The plan to stabilise debt is an important part of the government’s pledge to fiscal consolidation. SA’s steeply rising debt is crowding out spending on other budget items and is a key concern raised by credit ratings agencies. “If we subtract Eskom support, then the story ...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, ProfileData financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.

Questions or problems? Email or call 0860 52 52 00. Got a subscription voucher? Redeem it now