Borrowing binge catches up with SA as debt costs soar past R385 billion
South Africa is now spending more on paying interest on its debt than on healthcare or economic development
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South Africa is now spending more on paying interest on its debt than on healthcare or economic development.
This is according to the Reserve Bank’s September Quarterly Bulletin, which warns that rising debt-service costs are putting growing pressure on the national budget.
The report also shows that interest payments have climbed to R385.6 billion in the 2024/25 fiscal year and now account for over 5% of GDP, more than double their share in 2008.
"South Africa’s debt-service cost (interest payments) has risen at an annual average rate of about 13.1% ‒ reaching R385.6 billion in fiscal 2024/25," the report notes.
"As a percentage of gross domestic product (GDP), debt-service cost has risen from 2% in fiscal 2008/09 to over 5% in fiscal 2024/25".
The report added that the cost of servicing debt is rising faster than spending on any other government function.
"The cost of servicing debt is rising faster than spending on any other government service ‒ meaning repaying the debt-service cost is taking up a bigger slice of the national budget. Debt-service cost as a share of total government spending now exceeds individual spending on health, economic affairs and housing".
The reports also noted that "in 2024, about 75% of South Africa’s domestic government debt was held by local investors ‒ up from 60% in 2018".
"This shows that foreign investors have pulled back, worried about the risks in our economy. Because investors see more risk, they demand higher returns, making it more expensive for the government to borrow"
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mthobisi.nozulela@iol.co.za