Finance

Public debt becoming an unbearable burden for South Africa’s economy

Public debt becoming an unbearable burden for South Africa’s economy
Friday, 26 July 2019 19:47

Recent indicators from the Washington-based Institute of International Finance (IIF) and other sources show the worrying rise in debt in the financial sectors and government in South Africa.

Among emerging countries, South Africa is the only country where financial sector debt reached 25.6% of gross domestic product at the end of the first quarter of 2019, compared to 22.5% at the same time in 2018. At the same time, the government's debt reached 59.3% of GDP at 31 March 2019, up from 53.4% of outstanding amounts in 2018. Although less significant, the debt of households and non-financial corporations has also increased and in each case exceeds 32% of GDP.

This pressure is in addition to the negative effects of a sluggish economic environment, with low growth prospects and less revenue for the government, leading to more public deficit.

In response to this situation, the government of Cyril Ramaphosa (photo) decided to support, at whatever cost, several state-owned companies in difficulty. In particular, it plans to double the amount initially set to be invested in Eskom, the country's electricity distribution company.

IIF projects that South Africa's public debt could reach 61% of GDP in 2020-21, compared to a government forecast of 57.4%, excluding the indirect debt of state-owned companies, which is 8% of GDP.

Idriss Linge

On the same topic
Togo lawmakers approve bill updating 2008 environmental framework law Reform introduces green economy, circular economy, and carbon tax Measure aims...
Retail investors in Cameroon invested 25.9 billion CFA francs ($45.9 million) in government securities as of Jan. 31, 2026. Retail participation...
Nigeria introduced a 1% flat tax on the turnover of informal-sector businesses under a new presumptive tax framework. Authorities exempt nano and small...
Investment firm Phatisa has sold its majority stake in Zambia’s egg producer Goldenlay. Belgian animal feed company Vanden Avenne acquired the...
Most Read
01

Military escalation between Iran, Israel, and the United States has raised the risk of disruptions...

As Hormuz and Suez Tensions Escalate, Africa Faces a Potential Energy and Trade Shock
02

Senegal launches 200 billion CFA bond in UEMOA Proceeds to fund 2026 budget, transformation agend...

Senegal Launches $360 Million Regional Bond Sale
03

Ethio Telecom has signed a new agreement with Ericsson to expand and modernize its telecom netwo...

Ethiopia’s State-Owned Telco Teams Up With Ericsson to Expand and Upgrade Its Network
04

Central Bank of Nigeria said 20 commercial banks have met new minimum capital requirements, with...

Nigeria Advances Banking Reform With Strong Recapitalization Progress
05

The BCEAO cut its main policy rate by 25 basis points to 3.00%, effective March 16. Inflation...

BCEAO Cuts Key Rate to 3.00% as WAEMU Faces Deflation
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

regie@agenceecofin.com 
Tél: +41 22 301 96 11 
Mob: +41 78 699 13 72


EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.