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 ...

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