SA’s debt stock set to rise to R2.3tn by 2017/18
Government’s gross debt stock is projected to rise to a whopping R2.3-trillion in 2017/18 and Finance Minister Nhlanhla Nene has warned that, unless steps were taken to rein in debt, interest payments could begin exceeding allocations for social protection.
Government has allocated R155.3-billion for various social grants in 2015/16, while interest on State debt was projected to rise from R115-billion this fiscal year to R153-billion in 2017/18.
To address the risks associated with rising debt, Nene said government would stick to a package announced in October, which outlined initiatives to lower the pace of spending growth, raise taxes and reduce debt.
Through the package, net debt is projected to stabilise at 43.7% of gross domestic product (GDP) in 2017/18, about 2.6 percentage points lower than the 2014 Medium-Term Budget Policy Statement estimate and below many economists' expectations.
The reduction, the Budget Review stated, reflects both higher nominal GDP and changes to the debt issuance strategy.
“Total nominal gross debt stock is projected to grow from R1.8-trillion in 2014/15 to R2.3-trillion in 2017/18. When combined with redemptions, government’s gross borrowing requirement is R229-billion in 2014/15, growing to R247-billion in 2017/18,” the review adds.
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