Debt-related hikes may just do SA in

Let Finance Minister Tito Mboweni’s words sink in: “Government is borrowing at a rate of R2.1 billion per day”. That’s R63 billion a month, R756 billion a year – provided we meet our payment schedule, and interest doesn’t soar.

No wonder we are expected to have debt of R5.5 trillion by 2023-24. Perhaps it should be mentioned again – “government is borrowing at a rate of R2.1 billion per day”. It’s staggering to think how that money could have been put to better use. But that’s the reality and Mboweni and company have no option but to make big plays in a bid to rescue the economy, which has been decimated by Covid-19, even though it was on the ropes before the pandemic.

With these astronomical figures in mind, it’s crazy to see the response from some quarters after Mboweni delivered his medium-term budget policy statement.

Public Enterprises Minister Pravin Gordhan was first to hit out at anyone questioning the SAA decision to give the national carrier R10.5 billion. He said doubters had “lack of financial literacy and understanding of government processes”, insisting the money was needed to finalise the business rescue plan and, if not, concluded it would cost close to double to liquidate the national airline at a cost of R18.5 billion.

He may have a point, but throwing more money into the SAA pit is obviously going to anger taxpayers. They’ve had to dig deep into their pockets for years and the airline is in tatters due to rising debt and mismanagement.

Next up, civil servants threatened they will bring the country to its knees and down tools if government pushes on with its proposed three-year wage freeze. Really? Strikes will only plunge the country into further misery.

Mboweni added: “We must be careful to avoid the fate of countries like Argentina and Ecuador that defaulted on their debt this year. Countries that find themselves in default see sharp GDP contractions and currency depreciations. On current trends, more of our taxes are being transferred to bondholders than to critical services for our people. An uncontrolled increase in borrowing costs would harm small businesses, ordinary South Africans and the poor the most.”

Heaven help us all.

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