Government debt servicing costs doubled

National Treasury’s debt servicing costs have more than doubled in April 2023 compared to the year before.

The Statement of the National and Provincial Governments’ Revenue, Expenditure and National Borrowing as of 30 April 2023, released today, showed that April’s debt-servicing costs were R7.80 billion.

This is more than double the amount of April 2022, which stood at R3.38 billion.

The National Treasury also reported a far higher deficit than the previous year.

The government ran a deficit of R45.21 billion in April 2022. However, the deficit in April 2023 came out to R67.51 billion.

Earlier this year, economists sounded the alarm over South Africa’s increasing debt burden, particularly its debt-servicing costs that threaten to drag the country into a debt spiral.

South Africa’s debt burden has steadily risen over the last decade, and with the government’s R254 billion Eskom bailout, it is set to increase further.

The country’s debt is expected to rise from R4.73 trillion in the current financial year to R5.84 trillion in the 2025/26 financial year.

This would result in debt-to-GDP peaking at 73.6% in 2025/26 – two percentage points higher than anticipated by the National Treasury in the Medium Term Budget Policy Statement.

In addition to higher debt servicing costs, the National Treasury reported lower revenue in April 2023 than in April 2022.

Revenue in April 2023 was R85.06 billion, significantly less than the R93.28 billion collected in April 2022.

Finance Minister Enoch Godongwana has expressed concern about the government’s low revenue in the first quarter of this year.

He said the revenue the National Treasury saw in the first month of the year “did not look good”, and this low revenue reflects the economy’s performance.

Godongwana said he is concerned that this low revenue, the effects of ongoing load-shedding, and the weak rand could plunge the country into a recession.