In just five years, SA has borrowed R1.8 trillion from investors - Enoch Godongwana

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Finance Minister Enoch Godongwana revealed the state of the country's government debt.
Finance Minister Enoch Godongwana revealed the state of the country's government debt.
Brenton Geach, Gallo Images via Getty Images
  • South Africa's debt has grown considerably over the last five financial years.
  • Gross loan debt has increased from R2.5 trillion in 2017-'18 to R4.3 trillion in 2021-'22.
  • During this period, South Africa has borrowed an additional R1.8 trillion.

South Africa's gross loan debt has almost doubled over the last five financial years, ballooning from R2.5 trillion in the 2017-'18 financial year to R4.3 trillion in 2021-'22.

During this period, the government borrowed an additional R1.8 trillion from domestic and international investors.

This emerged in Finance Minister Enoch Godongwana's response to a written parliamentary question from EFF MP Floyd Shivambu.

READ | If we don't keep debt on a sustainable level, our sovereignty will be undermined, Masondo warns

Shivambu wanted details on the government's loans from domestic and international financial institutions in the last five financial years.

Godongwana said:

Gross loan debt has increased from R2.5 trillion in 2017/18 to R4.3 trillion in 2021/22. Government has therefore borrowed an additional R1.8 trillion from both domestic and international investors.

Furthermore, Godongwana said, the government's gross borrowing requirement was being financed through the issuance of domestic short- and long-term loans, foreign currency long-term loans, and cash balances.

"Domestic short (Treasury bills) and long-term loans (bonds) are issued to market participants in the primary market (primary dealers and other financial institutions) through weekly auctions. The market participants buy these bonds on behalf of their clients, which include pension funds, foreign investors, insurers, monetary institutions, other financial institutions, and individuals, to name a few," Godongwana added.

Speaking at the Public Service Summit last month, Godongwana said the government expected its debt-servicing costs to be close to R500 billion per annum by the next fiscal year.

In January, the World Bank announced that it had approved South Africa's request for a $750 million (about R11.4 billion) loan.

In July 2020, the International Monetary Fund granted South Africa a $4.3 billion (around R70 billion at the time) loan to support job creation and provide protection for businesses impacted by the Covid-19 pandemic.

In April 2021, it was announced that South Africa would get a $1 billion (R14.5 billion at the time) loan from the New Development Bank (NDB).

READ | Outlook improving but spending, debt still major risks, Godongwana tells Parly

The NDB is a development finance institution established by Brazil, Russia, India, China and South Africa as part of the Brics grouping.

Godongwana also said the share of domestic bonds held by foreign investors declined to a 10-year low of 28.2% by December 2021.

"Although these investors remain the largest category of domestic bondholders, risk aversion is rising due to global and domestic events. Other financial institutions and pension funds increased their holdings from 17.6% and 22.4% in 2020 to 20.1% and 23.5% in 2021, respectively.

"South African banks have been holding significantly more government debt because of weak demand for private credit and relatively high interest rates on government debt," he said.

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