Media statement - Fiscal discipline pays off: SA's debt trajectory offers hope for ratings upgrade
"This is the first time since the 2008 financial crisis that public debt will not grow as a percentage of GDP." Those words from Finance Minister Enoch Godongwana in his MTBPS speech are profoundly significant for the country’s economic prospects. They are the culmination of painful decisions where the government has stuck to the fiscal path in the face of immense pressure to spend more in other areas.
Minister Godongwana outlined a clear fiscal pathway aimed at stabilising and then reducing public debt over the medium term, with government debt stabilising in 2025/26 at 77.9% of GDP. That, along with achieving a primary budget surplus, has positive implications for the country’s credit ratings –
“BLSA is hopeful that we can lift ourselves out of sub-investment grade territory, while it will also heighten investor confidence. This would be hugely positive for the country’s economic growth prospects as debt service costs would fall. Importantly, it would be a well-deserved reward for the years of fiscal discipline, providing more scope to increase expenditure in areas of need, including for welfare expenditure and economic development,” says BLSA CEO Busisiwe Mavuso.
This would be hugely positive for the country’s economic growth prospects as debt service costs would fall. Importantly, it would be a well-deserved reward for the years of fiscal discipline, providing more scope to increase expenditure and economic development in areas of need, including for welfare expenditure.”
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