The national treasury has downplayed concerns expressed by MPs that South Africa's total debt was set to rise to uncomfortably high levels.
In this week's budget, treasury estimated debt would rise to 27.4 percent of gross domestic product (GDP) by 2011/12 from 22.6 percent in 2008/09.
The treasury was "not uncomfortable with the increase in the debt", treasury budget office head Kuben Naidoo assured ANC MP Bafunani Mnguni and Democratic Alliance MP Kobus Marais at the national assembly finance portfolio committee. There was no reason to panic, he said.
The net loan debt as a percentage of GDP has been on a downward trend, dropping from 29.6 percent in 2005/06 to 26.4 percent in 2006/07 and 23.4 percent in 2007/08.
Sanlam's chief economist, Jac Laubscher, noted that the downward trend had reversed "very strongly". If one went back to the October medium-term budget policy statement, he noted, the debt to GDP ratio in 2011/12 was then projected to be just 19.9 percent; "now we are projecting 27.4 percent", almost 40 percent more.
However, he agreed with Nicky Weimar, Nedbank's senior economist, who argued that the rising debt level - to finance a budget deficit of 3.8 percent of GDP in the year ahead - was nowhere near a debt trap. It was only when the debt to GDP ratio reached 50 percent that alarm bells should ring.
Weimar put the figure higher. She said that the International Monetary Fund considered it prudent to run a debt to GDP ratio of 60 percent
Gross loan debt is set to rise from R628.7 billion in 2008/09 to R736.6 billion next year then to R918.5 billion in 2011/12.
Foreign debt is scheduled to remain at just more than 4 percent of GDP during the medium term. - Donwald Pressly