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The Star
21-05-2025
- Business
- The Star
Government debt projected to hit R6 trillion as South Africa borrows R1. 6 billion daily
Siphelele Dludla | Published 8 hours ago South Africa's public debt is set to surge to unprecedented levels in relation to gross domestic product (GDP) over the 2025/26 fiscal year. This comes as the national government will be borrowing an average of R1.6 billion per day on the back of rising spending demands and insufficient additional revenue. According to the Budget Review 2025 documents released on Wednesday, the gross borrowing requirement for the government has increased from R579 billion at the time of the 2024 Budget to R588.2bn in 2025/26. This means that the government's borrowing requirements will see Treasury going to the market to raise at least R1.61bn everyday of the year, up from a daily average of R1.58bn. The National Treasury said this borrowing requirement will be financed through a combination of domestic short- and long-term loans, foreign-currency loans and the use of cash balances. Finance Minister Enoch Godongwana told Parliament that the gross government debt was expected to increase from R5.69 trillion in 2024/25 to R6.09trln in 2025/26, and R6.82 trln in 2027/28. However, he said the gross borrowing requirement was projected to decline by a total of R30.2bn between 2024/25 and 2027/28, mainly due to lower projected spending relative to the March 2025 Budget Review. Godongwana said the May 2025 Budget Review aimed to stabilise government debt in 2025/26 while increasing infrastructure investment to support higher economic growth. He said additional revenue and expenditure measures were required to stabilise the public finances in the context of weaker-than-anticipated global and domestic economic growth. "In 2025/26, government debt is projected to stabilize at 77.4% of GDP. While this is 1.2% higher than projected in the March 12 budget, it is mainly due to lower nominal GDP," Godongwana said. "The main budget deficit decreases by R8bn over the Medium-Term Expenditure Framework, compared to our estimates in March. This narrower deficit is enabled by the steadily expanding primary surplus. By 2027/28, the primary surplus will grow from an estimated 0.8% of GDP in this financial year to 2.1%." Last week, S&P Global ratings agency warned that South Africa's debt-to-GDP ratio could rise as high as 80% in the medium-term, a prospect that would result in the government being constrained to meet basic service requirements. Meanwile, debt-service costs - at R426.3bn - will consume 22 cents of every rand collected in revenue in 2025/26. The government will spend R1.35trln servicing the debt over the three-year spending period. "Put differently, this means in 2025/26 alone we are spending around R1.2bn per day to service our debt. This is more than what we spend on frontline services such as health, the police and basic education," Godongwana said. "We must maintain our efforts to reverse this trend, and prevent the cost of debt from robbing us of resources that could otherwise be spent on pressing social needs, or to invest in growth. This fiscal strategy is how we will drive down the debt to GDP ratio, slow the growth in debt service costs and rebuild our fiscal buffers. And in this way shield ourselves from an increasingly uncertain and unpredictable external environment." Visit:
The Star
21-05-2025
- Business
- The Star
Treasury slashes SA's GDP forecast for 2025 by 0. 5 percentage points on global headwinds
Siphelele Dludla | Published 54 minutes ago The National Treasury has revised South Africa's growth forecast for 2025/26 fiscal year drastically lower on the back of a weaker global outlook, trade frictions, increased uncertainty, and lower projected investment. Finance Minister Enoch Godongwana told Parliament on Wednesday that since the publication of the Budget Review in March, greater uncertainty and trade fragmentation had contributed to a weaker economic outlook. Godongwana highlighted that South Africa was highly exposed to external volatility as a small open economy dependent on global trade and financial inflows. On the back of heightened trade tensions and elevated policy uncertainty weighing on the global outlook, Godongwana said Treasury had to revise its GDP figures downwards by 0.5 percentage points. "As a result, we now estimate real GDP to grow at 1.4% in 2025. This is lower than the 1.9% we projected in March," he said. Godongwana said the outlook was negatively affected by the impact of weaker-than-expected growth in the fourth quarter of 2024, along with persistent logistics constraints, heightened political uncertainty, high borrowing costs and global headwinds. In the medium term, Treasury is forecasting domestic GDP to rise moderately to an average of 1.6% between 2025 and 2027, significantly lower than the 1.8% forecast two months ago. "Over the next two years, we project real GDP growth to rise moderately, to 1.6% in 2026 and 1.8% in 2027," Godongwana said. In recent months, the announcement of large tariffs by the United States, followed by a partial/temporary suspension of these measures, triggered severe volatility in global markets, trade and growth projections. In April, the International Monetary Fund projected that global growth will fall from 3.3% in 2024 to 2.8% in 2025, recovering to only 3% in 2026. Growth in advanced economies is expected to slow to 1.4% in 2025, dragged down by a weaker outlook for the US. Similarly, growth in emerging markets and developing economies is expected to slow from 4.3% in 2024 to 3.7% in 2025, with the largest downward revisions for countries hardest hit by recent US trade actions – particularly China and Mexico. "At the same time, inflation expectations are now above central bank targets in many advanced and emerging market economies," Godongwana said. "And new trade barriers may raise inflation and prolong the cycle of higher interest rates." Godongwana said the Treasury's strategy for faster growth, and to shield the country from the worst impacts of an increasingly uncertain global environment, remained anchored on maintaining macroeconomic stability, implementing structural reforms, improving State capability, and accelerating infrastructure investment. He said although South Africa was benefiting from more stable power supply, structural constraints continued to limit economic growth and downside risks had broadened. Godongwana said domestic risks have tilted to the downside, and also warned that port and rail constraints and increased spending pressures could undermine investment and growth. He said that rapid and effective implementation of reforms was needed to accelerate growth and employment. "Looking further ahead, the risks to the outlook remain elevated. These include the worsening global outlook, weaker-than-expected growth in the fourth quarter of 2024, the persistence of logistics constraints and higher borrowing costs," he said. "These developments are a vivid reminder that we must urgently turn the tide on our economic prospects and get our fiscal affairs in order. Faster, inclusive growth that creates jobs is the only path towards a more prosperous South Africa." Visit:
IOL News
15-05-2025
- Politics
- IOL News
Makate vs Vodacom: Court silence sparks outrage over delayed Please Call Me ruling
The fight for justice: #PleaseCallMe Movement's call to action Image: Siphelele Dludla / independent Newspapers The #PleaseCallMe Movement (PMC) has written an open letter urging national leaders to step in and resolve the ongoing legal dispute concerning the "Please Call Me" service, as it remains unresolved nearly six months after the Constitutional Court heard the case. The organisation has described the delays as 'unfair' and warned that they threaten the integrity of the country's justice system. The dispute began in 2000 when Nkosana Makate, then an employee at Vodacom, proposed a service allowing users to notify contacts they were calling without incurring charges. This simple innovation would generate billions of rand for the telecom giant. Makate's efforts to secure fair compensation have spanned over two decades and have resulted in multiple court victories. His legal journey has resulted in nine judgments in his favour, including three from South Africa's highest court, the Constitutional Court. In 2016, the Constitutional Court criticised Vodacom and its executives for unethical conduct, emphasising the importance of recognising Makate's contribution. Despite these rulings, a final resolution has remained elusive. In 2019, the Supreme Court of Appeal ordered Vodacom to pay Makate between 5% and 7.5% of the revenue generated by the service over the past 18 years. Vodacom appealed, and the case was escalated to the Constitutional Court, which has yet to rule. The court recently announced that its decision is 'reserved,' and no timeline for judgment was provided. The Open Letter: A Call for Justice and Accountability On Thursday, Modise Setoaba, Convener of the #PleaseCallMe Movement, issued an open letter expressing frustration and concern over the judicial delays. Video Player is loading. 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Advertisement Next Stay Close ✕ The letter underscores how the protracted process damages public trust and undermines the social contract. 'This is unfair. The #PleaseCallMe case illustrates how financial influence can be used to hinder, direct, disregard, and undermine the country's laws. 'It is generally recognised that the issue has been extensively ventilated and Makate has consistently come out on top, with nine favourable decisions — yet the principle of res judicata does not seem to be invoked.' The letter also criticises the lack of leadership and the growing impatience among supporters. 'We are sitting on the sidelines watching as time goes by. While it seems difficult to reach the end, my worry is the social contract. How are we encouraged to obey the law when publicly observing it being abused like this for so long?' Makate's supporters further voiced their frustrations, emphasising that they have maintained peaceful protests. 'We have made it clear from the beginning that our enemy is Vodacom and its arrogant CEO. We worked hard and kept all demonstrations peaceful, raising our frustrations at their premises, the JSE and the Constitutional Court. No incidents of property damage were reported.' In a candid reflection, the letter asked whether violence would have changed anything. 'Maybe we should have been violent, damaged property, burned tires, blocked streets, looted shops—those are the languages the corporate bourgeoisie understands. 'But what would that have done for Makate? He is the litigant here. The focus should be on him and the progress he has made alone. We are not a rent-a-crowd.' 'While Makate is subdued in the legal process, we must ask: Where are the leaders of society—political or otherwise? Why is this man ignored? Are we afraid of losing deals or jobs? Who's next?' 'To put it into perspective, my child was not yet conceived when PCM was introduced; now she's a doctor. That's how long this matter has been dragging on.' Legal experts and civil society groups have voiced alarm at the delays. An article published last week by IOL highlighted the nation's growing frustration. Dunisani Mathiba, from the Office of the Chief Justice, explained that delays are often due to the complexity of cases and the deliberation process. 'There is no set timeframe within which judgments are typically issued. The judges will determine when the judgment is ready.' Legal analyst Francois Botes pointed to systemic issues hindering timely justice. 'The workload is overwhelming, and vacancies on the bench worsen things. Short-term measures like appointing acting judges help, but are insufficient. Long-term reforms are necessary to address these systemic challenges.' The #PleaseCallMe Movement's open letter concluded with a plea for decisive leadership. 'We call on the leaders of this country—political, judicial, and societal—to recognise the importance of this case, not just for Makate but for the integrity of our justice system. 'Justice delayed is justice denied. The longer we wait, the more trust we erode in our institutions. It is time to act and ensure fairness prevails,' read the letter. IOL Politics
