Renowned economist Dawie Roodt said the Finance Minister is economical with the truth about the true extent of the financial crisis in South Africa.
Yesterday, Finance Minister Enoch Godongwana tabled his Medium-Term Budget Policy Statement in Parliament.
He said gross debt will rise from R4.8 trillion in the current financial year to R5.2 trillion in the next financial year. By 2025/26, it will exceed R6 trillion.
“We expect gross government debt to stabilise at 77% of GDP by 2025/26. This is higher than the level we forecasted in February,” the Minister said.
Roodt said the Minister is economical with the truth. “He did not include many items in his debt and deficit numbers,” he said.
He highlighted that Godongwana excluded the R254 billion debt it will take over from Eskom in the state’s debt.
“The International Monetary Fund (IMF) has previously indicated that Eskom’s debt has to be included in the state’s debt,” he said.
Eskom’s finances deteriorated further, with its recent financial statements revealing another R23.9 billion loss. Eskom interim CEO Calib Cassim said they expect another significant loss next year.
“Eskom cannot go on like this. Obviously, the day will come when Eskom asks the state for even more money,” he said.
These bailouts are not included in the deficit or the debt numbers, which skew the view of the country’s true financial position.
The same goes for local municipalities. Godongwana indicated that he would write off around R20 billion of their debt. That is also not included in the numbers.
He added the growth expectation will not materialise and that the fiscal deficit will be much higher than expected.
“We are not going to see economic growth of 0.8% this year, and definitely not 2% in two years,” he said.
“The fiscal deficit is not going to be 4.9% of GDP, as the Minister said. It is more likely to be between 6% and 6.5% of GDP.”
He added that the Finance Minister’s prediction that South Africa’s debt-to-GDP will stabilise at 77% is too optimistic.
“We will see 77% debt-to-GDP next year and that it will continue to go up after that,” he said.
“We are in very deep trouble. The debt numbers are much worse than what the numbers the Minister shared suggest.”