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The South African government’s plans to curb rising public debt are too ambitious, says a team of local and international economic advisers to President Cyril Ramaphosa, recommending a “more gradual and credible” approach.
Debt service costs in Africa’s most industrialized economy run the risk of hampering efforts to combat the Covid-19 crisis and crowding out spending on priorities like healthcare, education, and policies aimed at pulling millions out. people out of poverty.
They are about 12% of total government spending and the fourth largest spending item, similar in size to what is spent on health services, according to the budget presented in June to combat the coronavirus.
The Ramaphosa Economic Advisory Council’s recommendation, one of many contained in a report seen by Reuters, will fuel the debate on the country’s fiscal strategy ahead of Finance Minister Tito Mboweni’s mid-term budget, which expires later this year. month.
“The pace of debt reduction is unrealistic,” the council said, commenting on the National Treasury’s target, set in June, for public debt to peak at about 87% of GDP in fiscal 2023. / 24.
“A more gradual but credible debt reduction target is recommended … around 100% of GDP.”
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