While you were asleep: SA’s looming debt crisis

South Africa’s debt crisis is mounting and won’t be a short-lived experience but is instead a process happening right now in perpetuity as the treasury struggles to keep additional spending pressures under control says Wits adjunct professor Michael Sachs.

Since 2018, the government’s response to rising debt costs has been to implement a programme of “fiscal consolidation” where social spending is cut down and borrowing reduced to a minimum to alleviate the overall debt burden. For such a plan to work, the government must achieve a “primary budget surplus” instead of a deficit in all spending excluding debt costs.

Sachs said the usual definition for a fiscal crisis in a country is seen as an event such as a default on debt as has been seen in Argentina and more recently in Zambia but what is actually going on is not something that might happen in the future but is happening every day and “right now.”

“…and that is the crowding out that results from an increase in debt servicing costs, which crowd out the space for social spending,” said Sachs.

Meanwhile, in the United States, a teenage gunman walked into an elementary school in Uvalde, Texas on Tuesday and killed 19 children and two teachers. The lone gunman shot his own grandmother and fled in a car chase when he entered the Robb Elementary School and began his shooting spree.

President Joe Biden, visibly shaken, pleaded with Americans to stand up to the gun lobby and enact tighter gun control restrictions. The attack comes just ten days after a mass shooting at a Tops supermarket in Buffalo, New York, claimed 10 lives.