Tito Mboweni, South Africa’s Finance Minister. Photographer : Ayanda Ndamane/African News Agency (ANA)
Tito Mboweni, South Africa’s Finance Minister. Photographer : Ayanda Ndamane/African News Agency (ANA)

MTBPS: Faced with surging debt, SA sticks to borrowing plans

By Bloomberg Time of article published Oct 28, 2020

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JOHANNESBURG - South African Finance Minister Tito Mboweni steered clear of increasing borrowing in his medium-term budget, instead announcing spending cuts to offset falling tax revenue.

The National Treasury’s financing plan unveiled Wednesday was little changed from the special adjustments budget announced in June to take account of the devastation wrought by the coronavirus.

The government will rely on borrowing from multilateral institutions and draw on sterilisation deposits it holds with the South African Reserve Bank to help finance a budget deficit that’s seen at 15.7% of gross domestic product this year.

Here are the main points from the financing plan:

  • The gross borrowing requirement -- the sum of the main budget deficit and maturing loans -- is expected to reach R774.7 billion ($47.4 billion) this fiscal year. That’s marginally down from R776.9 billion projected in June, but up from the R415.8 billion that was raised in the previous fiscal year. It’s seen declining to R593.2. billion by 2023-24.
  • The Treasury expects to raise a net R143 billion in domestic short-term loans in the fiscal year through March, and an average of R66.7 billion annually over the next three years.
  • It intends raising R462.5 billion in domestic long-term loans this year, and an annual average of R469.9 billion over the following three years.
  • Foreign loans totaling R121.8 billion are set to be raised this year, R49.4 billion in 2021-22 and R49.3 billion in the year after that.
  • Gross loan debt is expected to rise to R5.54 trillion, or 92.9% of gross domestic product, in 2023-24, from R3.97 trillion, or 81.8%, this fiscal year.
  • Debt-service costs are projected to increase to R353.1 billion in 2023-24, from R233 billion.

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