Sub-Saharan Africa
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South Africa to Boost Borrowing While Trying to Rein in 'Runaway' Debt, SA Finance Minister Says

© Photo Twitter / @Treasury_RSAMinister Enoch Godongwana and former President Kgalema Motlanthe at the Annual Kgalema Motlanthe Foundation Investment Growth Forum in the Drakensburg, KZN Province.
Minister Enoch Godongwana and former President Kgalema Motlanthe at the Annual Kgalema Motlanthe Foundation Investment Growth Forum in the Drakensburg, KZN Province. - Sputnik Africa, 1920, 29.10.2023
The Kgalema Motlanthe Foundation, founded by Former South African President Kgalema Motlanthe, aims to facilitate "innovative and sustainable access to the economy and social development". The fund's Inclusive Growth Forum, uniting the country's politicians, experts to discuss the state's economic issues, kicked off on 27 October.
Measures to restrain South Africa's “runaway expenditure and debt” are to be announced as well as bumping up borrowing in the middle-term budget, the country's Finance Minister Enoch Godongwana said in his speech during the Annual Kgalema Motlanthe Foundation Inclusive Growth Forum.

"The problem with debt is whether the economy can service it. In this environment, in this trajectory, our ability to service that debt is becoming constrained, and therefore we have got to do something about it," the minister noted.

In addition, Godongwana highlighted the need to increase borrowing to be able to avoid "more massive" cuts.
"We have been forced to bump up borrowing, because if we did not, the cuts would have been more massive," he emphasized.
Ahead of the budget policy statement on 1 November, the minister underlined that the country's economy "is on the rocky road" of recovering from the COVID-19 pandemic and reiterated that moderate spending cuts are planned. However, a money-saving plan earlier presented by South Africa’s cash-strapped National Treasury reportedly was not backed by the country's ministers or President Cyril Ramaphosa.
According to media, a large revenue shortfall, exceeding budget deficit figures along with lower earnings from commodity exports - expected to be announced by Godongwana - have prompted concerns regarding the 2025 debt stabilization targets.
In early September, the treasury reported that the country faced a deficit of $7.63 billion, which exceeded the expected $6.56 billion. To curb government spending, a number of cost-reduction measures were presented by the body, among which was to advertise new procurement contracts for all infrastructure projects and a hiring freeze.
Moreover, Godongwana emphasized that the country is going to have "a serious challenge" as "foreigners are not buying [the state's] bonds anymore".
Furthermore, the finance minister stressed that instead of directly tackling the electricity and logistics problems, the country has been trying to ameliorate the economic situation by allocating money to the state-owned enterprises, including state utility firm Eskom and South African rail and logistics company Transnet, which reportedly recently needed about $5.3 billion from the government over the next two years.

"We've been focusing more on fixing Eskom than on fixing power to the grid. That challenge confronts us with the second problem - logistics. We've been focused more on fixing Transnet than on fixing logistics and getting products to the port," Godongwana revealed.

South Africa is suffering from an energy crisis, which forced Eskom to impose daily blackouts to prevent the national grid from overloading. This year, blackouts have intensified compared with their frequency in 2022, according to the enterprise.
However, in late August, Ramaphosa revealed that the energy crisis will be resolved by 2024 as the government is enhancing energy production.