South African Government Debt up 62% Under the Zuma administration

By Vivian Atud -info@atudandassociates.co.za

Johannesburg– Atud and Associates–The South African debt as a percentage of GDP is at an all-time high under the Zuma administration. When president Zuma came to power just six years ago in 2008, the national debt as a percentage to GDP was at 28%, today it is 46%.

SA gov debt

The increase in government debt comes at a time when the ministers of finance, and other economic cluster ministers are preaching fiscal discipline and putting spending under control. The increase in deficit would not be a surprise to many South African who are asking daily for public officials to account for tax payer’s money. There seem to be a correlation between increase in government deficit and wasteful expenditure.

A report released last week by the auditor general on national and provincial government audit showed that out of 1.035 trillion rand spend in the 2013/2014 financial year by various government departments and state owned entities- only 15 percent by value of these expenses had clean audits and constituted 25% of the departments audited. While 75 percent of government departments didn’t get clean audits. In education, health and public works only six departments reported their performance in a useful and reliable manner- the report said. Education and health are key government priority sectors and receive high proportions of tax payer’s money or government budgetary allocation. However, it is worrying that the Zuma Administration is not only increasing debts for South African children both born and unborn but is mismanaging tax payer’s money at the expense of health care, education and infrastructure for the poor.

From the look of things, with national health insurance, social grants and other expenses – we can only expect the trend in government debt to continue to increase under the Zuma administration. The future growth in the number of people directly dependent on government for various grants will exacerbate the nation’s debt problem.

Larger government debt poses the threat of higher taxes in the future as already signaled by the minister of finance to pay interest on the debt and other government priorities, thus likely inflicting on younger South Africans and future generations a greater tax burden and a weaker economy. It is not surprising that South Africa is only expected to grow 1.4 percent this year as opposed to over 3 percent forecasted at the beginning of the year. Parliament need to be more proactive in checking the excesses of government and seek ways to address the nation’s fiscal scenario.

We hope there will be clear guidelines to consolidate fiscal spending and grow the South African economy in the upcoming budget speech in 2015. The issue of bring national debt under control and enhancing service delivery especially for the poor is critical to take South Africa forward and we hope politicians will give this issue the seriousness it deserve and create a better life for all south Africans without indebting our children and future generations.

for more information contact: info@atudandassociates.co.za

 

One comment

  • The RSA governments investment policies are far from investor friendly and its extremely over-regulated . I engage with a broad spectrum of global investors who are quite keen to engage with South Africa but unfortunately the policies here not conducive to engagement all due to lazy ministers who are much to busy to meet with investors.

Leave a Reply

Your email address will not be published. Required fields are marked *