COSATU opposes Bill to stabilise public debt
13 March 2024
Today the Standing Committee on Finance (SCOF) deliberated on public submissions from relevant stakeholders regarding the DA’s Responsible Spending Private Member’s Bill. None of whom had opposed the intention of the Bill and the spirit in which it was introduced, which is to protect the most vulnerable in our society by containing the unsustainable accrual of public debt and excessive deficit spending.
A government, like any entity, must operate within its means. When a government consistently spends more than it earns in revenue, a budget deficit forms. To secure the funds necessary to fund this expenditure, the ANC has resorted to excessive deficit financing via increased debt issuance, the funds of which were not channelled to infrastructure development or service delivery. Instead, it was used to sustain salary increases of the ANC’s cadre millionaire managers who add little to no value to the sector.
Over time this unchecked cycle of spending and borrowing has pushed our public finances to a crisis point. Our public debt burden has surged from just 27% of GDP in 2008 to 72.2% (R5.207 trillion) in 2024/25 as per the February National Budget. The Budget revised the debt stabilisation target to 75.3% of GDP by the fiscal year 2025/26.
The cost associated with servicing the increasing debt stockpile has been the fastest-growing item on the Budget and continues to occupy an increasing share of GDP and revenue. As a result, debt-service costs have risen from R307.2 billion to R356 billion in the span of a year. This means that we pay nearly R1 billion per day to service debt that has little to no positive impact on the living standards of vulnerable South Africans who are battling a government-induced cost-of-living crisis.