{"id":1422,"date":"2023-10-12T10:08:38","date_gmt":"2023-10-12T10:08:38","guid":{"rendered":"https:\/\/www.innov8fs.co.za\/blog\/?p=1422"},"modified":"2026-03-18T11:46:25","modified_gmt":"2026-03-18T11:46:25","slug":"south-africa-running-out-of-time","status":"publish","type":"post","link":"https:\/\/www.innov8fs.co.za\/blog\/2023\/10\/12\/south-africa-running-out-of-time\/","title":{"rendered":"South Africa running out of time"},"content":{"rendered":"

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South Africa must repay R90 billion in foreign debt within the next three years as the country faces a significant fiscal deficit and mounting debt servicing costs.<\/p>\n

This is according to the South African Reserve Bank\u2019s (SARB) September 2023 Quarterly Bulletin.<\/p>\n

The government owes a total of R427 billion in marketable debt to foreign creditors as of 30 June 2023.<\/p>\n

Of this total, R28.4 billion will be due for repayment within one year, R61.6 billion will be due for repayment within one to three years, and R337 billion will be due for repayment in more than three years.<\/p>\n

Therefore, South Africa will need to repay R90 billion to foreign creditors within the next three years.<\/p>\n

According to the SARB, on average, the government will take 156 months \u2013 13 years \u2013 to repay its foreign debt.<\/p>\n

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Unexpired maturity composition of South Africa\u2019s national government\u2019s marketable foreign debt at face value. Source: National Treasury and the SARB.<\/figcaption><\/figure>\n<\/div>\n

Budget deficit<\/h2>\n

This comes as the Finance Minister recently announced that South Africa could be facing a\u00a0severe fiscal deficit\u00a0as tax revenue came in lower than expected.<\/p>\n

Economists at the Bureau for Economic Research (BER) said South Africa\u2019s fiscal situation is increasingly concerning \u201cas tax revenue undershoots and government spending exceeds earlier expectations\u201d.<\/p>\n

According to the National Treasury, South Africa\u2019s monthly budget balance fell back into a larger-than-expected and record monthly deficit of R143.8 billion in July, following a R36.6 billion surplus in June.<\/p>\n

\u201cThe fiscal balance is being squeezed from both the revenue and the expenditure side,\u201d the BER said.<\/p>\n

In the first four months of the current fiscal year \u2013 April to July \u2013 gross government tax revenue increased by only 0.8% year-on-year.<\/p>\n

This compares with the February budget expectation for an increase in the entire fiscal year of 5.6%.<\/p>\n

\u201cIf the current pace of underperformance in tax collections is sustained through the entire fiscal year, gross tax revenue will be R82 billion \u2013 1.2% of GDP \u2013 lower than the February projection.\u201d<\/p>\n

At the same time, government expenditure is outpacing budget expectations, increasing by 9% year-on-year from April to July.<\/p>\n

This is significantly higher than the February budget forecast of a 1.5% increase for the entire fiscal year.<\/p>\n

\u201cThese trends support the view that the 2023\/24 main budget shortfall will vastly outpace the 3.9% of GDP forecast in the February budget,\u201d the BER said.<\/p>\n

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Rising debt and costs<\/h1>\n

The fiscal deficit is only set to worsen as South Africa\u2019s debt servicing costs keep mounting.<\/p>\n

Efficient Group chief economist Dawie Roodt recently warned that South Africa\u2019s deficit and debt levels are approaching\u00a0dangerous territory.<\/p>\n

South Africa\u2019s current debt-to-gross domestic product (GDP) ratio is 73%. In nominal terms, the country owes around R5 trillion.<\/p>\n

At the current trajectory, Roodt expects the debt-to-GDP ratio to reach 76% in the current financial year and increase to 80% the year after that.<\/p>\n

\u201cA debt-to-GDP ratio of 80% for South Africa is getting into dangerous territory,\u201d Roodt warned.<\/p>\n

Earlier this year, economists started sounding the alarm over South Africa\u2019s increasing debt burden and particularly its debt-servicing costs, which threaten to drag the country into a debt spiral.<\/p>\n

Debt servicing costs are the payments that a government makes to its creditors, including interest payments and repayments of principal.<\/p>\n

South Africa\u2019s debt servicing costs have increased to roughly\u00a0R1 billion a day, which Sean Segar of Nedgroup Investments calculates at $1 per day per South African citizen.<\/p>\n

This line of expenditure has increased disproportionately to other expenditures, and the addition of R254 billion of Eskom\u2019s debt will amount to 19.8% of total government spending in the next three years.<\/p>\n

According to the SARB\u2019s bulletin, the debt-service cost schedule of the national government\u2019s foreign debt reflects the interest payments by currency of debt denomination due in the next 12 months, as from 30 June 2023.<\/p>\n

Interest payments in US dollars dominate the schedule, as expected from the currency of denomination analysis, followed by interest payments in rand on the Covid-19-related debt denominated in rand.<\/p>\n

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South Africa must repay R90 billion in foreign debt within the next three years as the country faces a significant fiscal deficit and mounting debt…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1422","post","type-post","status-publish","format-standard","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=1422"}],"version-history":[{"count":1,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1422\/revisions"}],"predecessor-version":[{"id":1427,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1422\/revisions\/1427"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=1422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=1422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=1422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}