The Democratic Opposition Alliance launched its ‘alternative budget’, highlighting the major debt problem currently facing the South African tax authorities.
The DA said the country was facing around R4 trillion in debt, mostly due to excessive government spending and borrowing – even before the Covid-19 pandemic.
“All of this debt has to be paid off in the years to come, and that means every South African, our children and our grandchildren will inherit the burden of paying off this debt,” he said.
“Every child born in South Africa today already owes R67,000 before they even take their first breath. And that number is growing as the government continues to borrow more.
The DA said the more the government borrows, the more people all have to pay in interest – leaving less money for basic services like education and health.
“It’s a double injustice against future generations – more debt to pay off and less basic services. It is simply wrong to sacrifice the future of our children. They deserve better.
“The ANC government needs to get the debt under control before bringing the whole country down with it. It must stop.
Finance Minister Tito Mboweni will deliver his budget speech on Wednesday February 24 in which he is expected to present a spending framework for the next three years.
Data published in December shows that the national government’s total gross loan debt increased 20.3% year-on-year to 3.7 trillion rand – or 75.2% of GDP as of September 30.
The coronavirus pandemic has exacerbated the deterioration of South African public finances as it weighed on revenue collection, raised the cost of borrowing and pushed the economy into its longest recession in nearly three decades, the Moody’s rating agency.
“South Africa’s credit profile is increasingly constrained by strong and widespread fiscal pressures, including rising borrowing costs and continued weak growth.
“Progress in structural economic reforms has been limited amid social and political obstacles.”
He added that the absence of reforms, shocks to primary expenditure or revenue or sustained increases in the level or volatility of interest rates could lead to further deterioration.
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