High public debt again expected to feature prominently on G20 Finance Track agenda

CAPE TOWN - High public debt is once again expected to feature prominently on the agenda of the G20 Finance Track when meetings of the bloc’s finance ministers and central bank governors get underway in Cape Town this week. 
 
South Africa is among emerging economies stuck in a debt trap that led to the national budget being nixed before it could be tabled in parliament last week, as Finance Minister Enoch Godongwana sought to hike value-added tax (VAT) to fund expenditure. 
 
This is the second round of G20 finance meetings after focus areas were introduced at a series of meetings in Johannesburg in December, shortly after South Africa took over the presidency of this prestigious global grouping from Brazil. 
 
African countries are struggling to accelerate infrastructure development that could improve inequality and poverty due to the high cost of accessing finance. 
 
They then find themselves drowning in debt service costs that limit spending in crucial areas such as health and education. 
 
South Africa is no exception with borrowing costs now knocking on 75% of gross domestic product (GDP), meaning that 20 cents of every rand collected in tax goes to paying off loans. 
 
This week’s G20 finance meetings will kick off with closed-door meetings of the finance and central bank deputies, as a precursor to their principals' meeting on Wednesday and Thursday. 
 
Finance ministers are expected to be handed a consolidated report of issues raised at the December gathering, to be carried forward to the leaders’ summit later this year. 
 
Just as United States (US) Secretary of State Marco Rubio last week boycotted the meeting of foreign affairs ministers in Johannesburg, so too will the country’s treasury secretary Scott Bessent give the occasion a skip. 
 
The US will take over the G20 presidency from South Africa at the end of the year.