SA’s debt burden likely to keep rising, says Moody’s

Credit ratings agencies have remained unconvinced by Finance Minister Tito Mboweni’s Budget review, expressing concern over South Africa’s rising debt levels. Mboweni last week said the national gross loan debt would increase from R3.95 trillion in the current fiscal year to R5.2trln in 2023/24.

The South African government’s borrowing requirements are expected to remain well above R500 billion a year, with the debt stabilising at 88.9 percent of gross domestic product (GDP) in 2025/26. However, the government now expects to record a consolidated Budget deficit of 14 percent of GDP compared to its October forecast of 15.7 percent.

Moody’s on Friday said the slightly lower deficits would not prevent the debt from rising as downside risks remain elevated over the public sector wages and support to state-owned enterprises (SOEs).

The ratings agency downgraded South Africa’s sovereign credit ratings status deeper into junk territory in October with a negative outlook.

Moody’s senior credit officer Lucie Villa said they still expected that the government’s debt burden would rise to reach 100 percent of GDP by the 2024 financial year.