Straight Talk
24 February 2021
Albert Einstein was being perfectly serious when he quipped that compound interest is the most powerful force in the universe. If we don’t resolve our debt crisis very soon, South Africans are going to learn this the hard way with sudden, deep, painful cuts across state spending.
On Monday, the DA released our Alternative Budget, a credible and costed plan to get the ANC’s debt under control, and thereby protect essential social spending, such as on grants, health, education, and safety.
With very achievable spending cuts, and whilst still protecting essential social spending and frontline staff wages, the DA’s Alternative Budget turns debt around by 2024/25, and at a 2.5 percentage point lower peak debt rate than the ANC, which optimistically forecasts getting debt under control by 2025/26.
Getting debt under control sooner means lower debt service costs (because lenders see us as less risky, so are prepared to lend at lower interest rates), which then allows for greater investment in social spending.