South Africa’s national debt is expected to reach a peak of 77% of GDP this year, due to several constraining factors, as the government struggles to manage excessive debt, Finance Minister Enoch Godongwana announced in Cape Town.
This alarming figure exceeds previous projections, where it was estimated that the country's debt-to-GDP ratio had peaked at 76% in previous budgets, marking the highest level ever recorded.
Speaking during the presentation of a new 2025 budget proposal before Parliament, the third in two months, Mr. Godongwana stated that the latest revision was partly due to the impact of global trade tensions on South Africa’s growth forecasts.
Responding to questions from opposition MPs, the minister denied that the government was losing the battle against the excessive rise in public debt, while acknowledging that it cannot be minimized.
The cost of debt servicing remains high, amounting to over $72 billion (1.3 trillion rands) for the next three years. In other words, in 2025-2026 alone, South Africa will spend around 1.2 billion rands per day on debt servicing, more than it spends on healthcare, police services, and basic education combined.
In reaction to these figures, the Chairman of the Parliamentary Finance Committee, Joe Maswanganyi, believes that the cost of servicing public debt should be renegotiated with partners.
While the process for adopting the new 2025 budget proposal restarted on Wednesday after two failed attempts since February, the heads of parliamentary committees are confident that the third time will be the charm.
The previous two attempts failed due to opposition from some political parties, including the ruling Democratic Alliance (DA), against any increase in the Value Added Tax (VAT) to cover a massive budget deficit of more than $3 billion.