Masondo: Debt-service costs preventing us from improving basic needs

David Masondo was speaking at a joint meeting of Parliament’s finance and appropriations committees on Tuesday.

Deputy Finance Minister David Masondo. Picture: @BlackBCouncil/Twitter

CAPE TOWN - Deputy Finance Minister David Masondo said billions more could be spent on health, education and other needs if the money did not have to go on servicing the country’s debt.

Masondo was speaking at a joint meeting of Parliament’s finance and appropriations committees on Tuesday, where he briefed parliamentarians on the Medium-Term Budget Policy Statement unveiled by Finance Minister Enoch Godongwana on Thursday.

South Africa’s debt would top R4.3 trillion this year and the burden of it was unsustainable, said Masondo.

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Credit rating downgrades have made it more expensive for the government to borrow and debt-service costs are now the fastest-growing item of expenditure in the Budget. Masondo said debt-service costs would soak up R303 billion in the 2022/23 financial year, and over the next three years would reach R1 trillion.

“This R1 trillion should be going to education, health and other important expenditure items. So debt does crowd out important expenditure items.”

Masondo said high borrowing levels by the government could also crowd out private sector investment.

“So high debt, unsustainable debt, is not in the interests of economic growth – it’s not in the interests of the poor.”

He said that between now and the main budget that Godongwana would present in February, the government would decide on its spending priorities and policy trade-offs to ensure the line was held on fiscal sustainability.