It will take years to stabilise debt and reach fiscal consolidation targets – Mboweni

PARLIAMENT – Finance Minister Tito Mboweni on Wednesday signalled it would take National Treasury years to achieve its debt stabilisation and fiscal consolidation targets after the Covid-19 crisis dramatically increased borrowing and the budget deficit.

Tabling his Medium-term Budget Policy Statement, the minister put the deficit forecast for the current financial year at 15.7 percent of gross domestic product from 6.4 percent in 2019/20.

He said debt was expected to reach 81.8 percent of gross domestic product (GDP).

Mboweni cautioned that with debt stock skirting the R4 trillion mark, failure to rein in the country’s worsening fiscal condition could trigger a sovereign debt default.

The finance minister had sounded a similar warning in his February budget, tabled weeks before the coronavirus pandemic reached South Africa, when he projected debt to stabilise at 87.4 percent of GDP in 2023/24.