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Pravin Gordhan, Minister of Finance. Photo: Matthew Jordaan.
The Treasury on Wednesday unveiled a new format for the consolidated government account that enables one to easily establish the primary balance which will be in surplus of 0.3% of gross domestic product (GDP) in 2014/15 from a deficit of 1.9% in 2012/13.
The primary balance is revenue minus non-interest spending.
If it is in deficit, then debt will increase. As SA has had a primary deficit for several years, the government debt has grown by R1 trillion since 2008.
Prior to 2008, SA used to run a primary balance surplus, which reduced debt and the associated debt servicing costs, so SA was well-placed to weather the 2009 global recession.
Government is aiming to reduce its level of borrowing in the years ahead as the economy recovers. This will avoid pushing up interest rates and crowding out private-sector investment. - I-Net Bridge
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bradley, wrote
Get rid of the debt entirely and we can utilize those funds which would flow out of the country for internal economic projects to alleviate poverty and unemployment
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