Ramaphosa confident government can stabilise debt

06 May, 2024 - 15:05 0 Views
Ramaphosa confident government can stabilise debt President Cyril Ramaphosa

eBusiness Weekly

Bloomberg

President Cyril Ramaphosa says he is confident his government has found the balance between spending on services while reining in the nation’s ballooning debt levels.

Ramaphosa was responding to questions from supporters of the ruling ANC during a five-day election campaign in the Western Cape ahead of the May 29 election. Polls predict that the party will lose its outright majority for the first time since coming into power in 1994.

Through the policies we have executed, particularly this year, we have maintained a fairly good prudent macroeconomic approach to manage our debt while ensuring that we make available resources for services that need to be delivered to our people,” Ramaphosa said during a town hall meeting.

National Treasury opted to tap the nation’s gold reserves for the first time this year instead of implementing further budget cuts while also servicing some of the nation’s debt.

Those hikes account for about a third of state expenditure after rising by an annual average of two percentage points above the inflation rate for the past decade.

“Debt is one of the concerns that we have as a government,” Ramaphosa said. “We don’t want our debt to balloon to unmanageable levels to a point where we will not be able to deliver services.”

Delicate act

The government has had to perform a delicate act with severe budget cuts affecting front-line services such as policing, health and education.

National Treasury predicts debt-servicing costs will decline by R30 billion over the medium term due to the gold tap. Debt as a share of the overall economy is now seen peaking at 75.3% in 2025/26, down from 77.7% estimated in November.

Finance Minister Enoch Godongwana joined Ramaphosa on the campaign trail in the only one of South Africa’s nine provinces not run by the ANC but by the main opposition, the Democratic Alliance.

Ramaphosa remains bullish about his party’s prospects despite a steady decline in electoral support over the past 15 years.

He ruled out any talk of needing smaller parties to form a government after 29 May, saying that the ANC continues to work toward retaining its majority.

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