- Enoch Godongwana has explained why South Africa loaned R11 billion from the World Bank, creating a significant debt
- The loan will be used to fund three budget items: redemptions, the gap between revenue and expenditure, and the cost of serving debts
- Godongwana said that in 2022 the Treasury would raise R630 billion, making it possible to repay the World Bank for the loan
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JOHANNESBURG - Enoch Godongwana, the Minister of Finance, has explained why South Africa loaned R11 billion from the World Bank, creating a significant debt.
Godongwana claims that the loan falls within the national budget and is not an irregular debt. The loan will be used to fund three budget items: redemptions, the gap between revenue and expenditure, and the cost of serving debts.
According to BusinessTech, the minister said that in 2022 the Treasury would raise R630 billion, making it possible to repay the World Bank for the loan. However, he added that South Africa's ever-rising debt costs incur expenses that the Treasury is struggling to keep up with.
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SA's debt cost crisis
A Democratic Alliance (DA) MP, Dr Dion George, raised concern about the growing nature of South Africa's debt costs, IOL reports. When asked about Dr George's fears regarding the country's debt, Godongwana said he agreed.
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“We should be worried about that correctly, as he says it is likely to crowd out service delivery because, as you see now, we are spending more on debt service costs than the entire security cluster combined. We are spending more than the health budget, " the minister said.
Godongwana concluded that issues such as service delivery require funds, but are being sidelined due to South Africa's increasing debt. He said this poses a threat to the government's ability to fulfil its mandates.
Reactions to the World Bank loan
"To build more Nkandlas, eish."
"To pocket the money so that the world bank can say what to do with our citizens in the country."
"To pay ANC staffers?"
"Oh, we know why. It's no secret. SA has been sucked dry by the corrupt and incompetent ANC mafia cadres, who now need more to loot."
SA's economy needs Ramaphosa to remain ANC president, Rand will collapse
In other news about the economy, Briefly News previously reported that Fitch, an agency that specialises in credit ratings, predicts that the African National Congress (ANC)'s internal presidential election in December can affect the strength of the Rand and the South African economy as a whole.
The agency believes that if Ramaphosa remains the president of the ruling party, the Rand will stabilise, but if he doesn't then the country's economic situation could unravel to the point where the Rand could collapse.
The Rand is currently being weakened by the effects of the ongoing Covid-19 pandemic and growing distrust in the ANC, which could cause the currency to only grow by 2.1% this year.
Source: Briefly News