South Africa's public debt could rise as high as 95% of gross domestic product by 2024 if the government doesn't restructure the State-run utility Eskom and implement a workable growth plan, the Institute of International Finance (IIF) said in a report.
The report, released late on Wednesday, echoes a warning on Tuesday by the central bank about ballooning government debt, which has doubled from less than 30% of GDP before the 2008 global financial crisis to nearly 60%.
The 95% estimate is the worst of four outlooks the IIF report laid out. But even its baseline case shows debt rising to 70% of GDP, according to the IIF, a trade group of financial institutions that tracks market conditions worldwide.
"South Africa’s debt sustainability is increasingly in question," the IIF said in its report.
The South African economy expanded 0.8% in 2018, and in February the National Treasury said it expected 1.5% growth in 2019.
The treasury has since warned it would probably have to lower that forecast, especially after it granted Eskom a R59-billion, two-year bailout package. The debt-laden utility supplies 90% of the country's electricity, but it was forced to cut power this year.
The IIF said a proposed plan to shift Eskom's debt to the government would add six percentage points to South Africa's sovereign debt. Further blackouts that dragged growth into contraction in the first quarter could not be ruled out, it said.
"The key for an improvement of the situation is the implementation of the national growth plan and Eskom restructuring blueprint. Investors and rating agencies will follow the October and February budget announcements closely."