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Total public debt could be 80% of GDP, or higher by 2020/21 - DA

Nov 05 2017 16:50
Liesl Peyper

Cape Town – Total public sector debt, including the liabilities of general government, state-owned enterprises (SOEs) and local government, could be 80% to GDP, or even higher by 2020/21, according to David Maynier, Democratic Alliance (DA) spokesperson on finance.

During a Parliamentary briefing on Friday, Maynier asked National Treasury to give a full breakdown of total public sector debt – figures that were not available at the time.

Maynier told Fin24 on Sunday that missing from the 2017/18 medium term budget policy statement (MTBPS) tabled on October 25, was “any mention” of total public debt.

Instead, National Treasury chose to focus on “total gross loan debt”, which is projected to grow to R3.4tr, or 59.7% of GDP in 2020/21.

In his mini budget, Finance Minister Malusi Gigaba said public debt as a ratio of GDP would increase to nearly 60% by 2020/21, and might not stabilise without faster growth or additional steps to narrow the budget deficit.

READ: Debt, deficits and possible downgrades 

In the February budget, the debt to GDP ratio was expected to stabilise at around 53% in the medium term. 

Maynier said the true figure that needs to be disclosed by National Treasury is what exactly total public debt will be in 2020/21.

“The last time total public sector debt featured in the budget books if I remember correctly was in 2015 when total public sector debt was already at 59.1% of GDP.

“Because there are no legislated fiscal rules, National Treasury chooses to focus on general government debt and chooses the debt metric, which is usually total net loan debt,” he said.

SOE debt

In June this year, Fin24 reported that nine of South Africa’s SOEs had debt of close to R700bn in the 2015-’16 financial year on which they had to pay R51bn worth of interest.

This figure was contained in a Parliamentary response by Gigaba, citing the liabilities of among others the Airports Company of SA (Acsa), SAA, Sanral, The Trans-Caledon Tunnel Authority (TCTA) and Transnet.

READ: Eskom single biggest risk to SA economy, warns Goldman Sachs 

Over and above the close to R700bn debt, Eskom’s total debt securities and borrowings amounted to R355bn, according to the power utility’s annual report for the financial year at the end of March 2017.

Municipal debt

In addition, municipalities have racked up billions of rand in debt to Eskom and water entities among others.

Fin24 reported in October that ten municipalities owe Eskom R7.5bn in overdue debt, while a number of local authorities owed water entities R3.7bn at the end of March this year.

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