Godongwana painted a sobering picture of the nation’s finances, warning that government debt had reached unsustainable levels. Gross loan debt is projected to peak at 75.3% of GDP in 2025/26, a marked deterioration from previous estimates, as interest costs continue to crowd out public spending on essential services.

“We are borrowing at an unsustainable rate,” the Minister told Parliament, noting that interest payments now exceed $22.34 billion. That figure surpasses spending on basic services such as health, policing, and social protection, raising serious concerns about SA’s ability to deliver on its development agenda.

To address the debt burden, the Treasury is implementing a fiscal consolidation strategy centred on expenditure restraint and improved revenue collection. Godongwana reiterated that no additional tax increases would be imposed this year, instead placing emphasis on curbing irregular and wasteful expenditure. He reaffirmed government’s commitment to the fiscal anchor, with the aim of reducing the primary deficit and stabilising debt over the medium term.

The speech also highlighted ongoing risks, including state-owned enterprises’ liabilities and contingent guarantees. Eskom, in particular, remains a major fiscal risk despite receiving debt relief packages, while other State-Owned Enterprises like Transnet and SANRAL continue to depend on government guarantees, adding pressure to the national balance sheet.

--ChannelAfrica--