South Africa’s debt to top 100% of GDP by 2025

Bloomberg

South Africa’s debt levels will exceed 100% of gross domestic product in 2025 and rise to almost 114% before the end of the decade, according to a document presented by Finance Minister Tito Mboweni and seen by Bloomberg.
Mboweni made the presentation to the National Economic Development and Labour Council, according to posts on his Twitter and Facebook pages. It shows preliminary estimates of gross government debt climbing to 80.5% of gross domestic product in this fiscal year, compared with a projection of 65.6% in February. The trajectory presented doesn’t show debt reaching a peak by 2028-29.
Mboweni is due to present a special supplementary budget on June 24, which will include the redirecting of 130 billion rand ($7.5 billion) of spending to help fund a 500 billion-rand rescue package announced by President Cyril Ramaphosa.
The revised fiscal plans will reflect the devastation wrought on the economy by the coronavirus and the associated lockdown to curb its spread.
The restrictions have weighed on tax income as many businesses couldn’t operate and some have shut down permanently.
“The budget process is in its final stages and still being finalised,” Treasury spokeswoman Mashudu Masutha-Rammutle said by text message. “This includes data and estimates. In this regard, any information published now, especially from unverified leaks, is potentially inaccurate compared to what will be tabled.”
Mboweni will also probably present revised economic growth and budget-deficit numbers. He said in April the tax take could fall by 32% and the fiscal shortfall could swell to more than 10% of GDP, compared with the 6.8% of GDP projected in February. The gap could be 13.7% of GDP this fiscal year, according a Bloomberg survey. The economy will contract 7% this year, according to the central bank.
Public-sector debt may rise to 6.4 trillion rand over the next three years, Martin Kingston, vice president of business group B4SA, said in a presentation at Friday’s meeting. The country’s borrowing need may be as high as 3.4 trillion rand over three years including private sector needs, he said.
“In the absence of significant structural reforms, debt-to-GDP levels will increase to unsustainable levels over the next three to five years,” he said.