Govt debt to hit R1.7 trillion

2012-10-25 14:45 - Sapa

Cape Town - Government's debt will rise to about R1.7 trillion over the next three years before starting to drop, Finance Minister Pravin Gordhan said on Thursday.

In his medium-term budget policy statement (MTBPS) tabled in parliament, he said debt was expected to increase from 35.7% of gross domestic product (GDP) this year to 39.2% of GDP in 2015/2016.

According to the document, government's total net loan debt will be R1.35 trillion next year, R1.54 trillion in 2014/15 and R1.71 trillion in 2015/16.

Gordhan said debt was then expected to decline in subsequent years.

"Arresting the growth of debt will require a significant reduction in the primary deficit - the amount by which non-interest spending exceeds revenue."

The primary deficit would be narrowed by slower spending growth, and a recovery in revenue from 2.1% of GDP to 0.4% between now and 2015/16.

Gordhan said debt service costs would strain government's pocket, growing at an annual average of 8.9% over the next three years.

"In the outer year (2015/16), it will cost government R114.8bn to service the debt, draining resources that could be spent on productive investment and social priorities," he said.

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