Finance Minister Tito Mboweni has sounded a fresh warning that South Africa could land up in a sovereign debt crisis within three years if government debt is not reined in.
A sovereign debt crisis is when a country cannot afford to pay any of the interest or the capital on amounts that it has borrowed, with dire consequences for the economy.
Mboweni was replying to debate on the revised fiscal framework he tabled last month when he unveiled his emergency budget to address the COVID-19 crisis.
Both Houses of Parliament on Wednesday approved the fiscal framework, in spite of opposition objections, paving the way for the supplementary budget to be considered at the end of the month.
Minister Mboweni’s emergency budget was savaged by the opposition during the debate, with the EFF labeling it “neoliberal drivel” and the DA and Freedom Front Plus also voting against it.
Curbing his exasperation, Mboweni reminded MPs that his supplementary budget was necessary because of the impact on an already limping economy of the COVID-19 pandemic and its economic fall-out.
“At the same time we have had to ensure that we struggle with the containment of the debt mountain that we see.
“And as I have indicated before, if we don’t do anything, the danger of South Africa facing a sovereign debt crisis is real – by 2023/24.”
Mboweni said that the government had no choice but to take “very serious measures”.
“I heard one honourable member saying ‘government must intervene’. This is intervention! This is precisely the intervention you need at the moment to deal with a difficult situation. That is called intervention.
“If you do nothing, you’re not intervening.”