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Mboweni: SA must avoid a sovereign debt crisis

The urgency of reining in the government’s spiralling debt was the overriding message from Mboweni’s special adjustment budget this week, and it was one he continued to hammer home.

FILE: Finance Minister Tito Mboweni. Picture: EWN

CAPE TOWN - Finance Minister Tito Mboweni on Thursday said South Africa had to avoid a sovereign debt crisis.

This is when a country can no longer afford to pay back interest or the principal amounts on its borrowings.

Mboweni was briefing Parliament’s finance and appropriations on the emergency budget he unveiled on Wednesday.

The urgency of reining in the government’s spiralling debt was the overriding message from Mboweni’s special adjustment budget this week, and it was one he continued to hammer home.

“Reduced revenue collection, therefore, clearly a constraint on our ability to spend the way we thought we could spend before, we expect revenue to be lost by some R300 billion,” Mboweni said.

At a time of poor economic performance and lower revenue, there's massive pressure on the government to deal with the COVID-19 pandemic.

“And it’s very important that we understand we are attacking COVID-19, but that we must also keep now reviving the economy,” the minister said.

But the spectre looming over the country was that of reaching the point where the government could not service its loans.

“We have to avoid a situation where we go into a debt crisis,” Mboweni said.

WATCH: SA's debt, unemployment & other points from Mboweni's zero-based Budget

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