Holders of SA debt have to know how it will be reduced
The government has to provide a credible plan to investors on the management of servicing costs
28 May 2020 - 18:11
The government needs to provide investors, particularly foreign holders of SA debt, with a credible plan as to how the country will reduce its debt and manage the servicing costs.
Debt-service cost is the interest paid on a country’s debt — the greater the debt, the greater the service costs. Finance minister Tito Mboweni said in an October 2019 speech, regarding SA’s growing debt-service costs, that the consequences of not acting now would be gravely negative for the country. “Over time the country would likely face mounting debt-service costs and higher interest rates and may enter a debt trap.”..
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