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Low economic growth prevents governments from paying off their debts: Government – SABC News

The government says low economic growth is hampering its ability to pay its debts.

Finance Minister Enoch Godongwana says the government faces a variety of challenges and is working hard to solve these problems.

Godongwana says that since taking office as finance minister, rating agencies such as Moody’s have not downgraded the country.

He also pointed out that the government would have to address key challenges such as water and electricity.

The Minister spoke on the SABC News Current Affairs program Watchdog.

South Africa has been struggling with rising government debt for many years.

When the Covid-19 pandemic began in 2020, the country’s weak economy took another hit.

The effect was reflected in heavy job losses and wage cuts due to strict closure restrictions.

In 2021 the country experienced social unrestmore unstable power supplyand storms.

All of this has increased the country’s economic growth prospects.

Finance Minister Enoch Godongwana says: “Debt alone is not the problem, it is the economy’s ability to pay that debt. We are accumulating large debts in an environment where the economy is not growing. What it means is the ability of the economy to pay off these debts is becoming a challenge. “

The capture of government agencies that manifests itself in fraud and corruption has exacerbated the debt problems facing the country.

Many of these organizations, such as Eskom, have also had to come to the rescue as they had difficulty managing their affairs.

More than ISK 300 billion has been spent on rescuing the electricity company in the last decade alone.

“Eskom has accumulated debt to the point that its ability to pay that debt now is questionable. Therefore, in my opinion, there is a general consensus when I look at the IMF report and the World Bank report that the challenges facing the government are that we have to think about how to manage that debt for Eskom. Not everything, but some of it Eskom can not afford, “Godongwana adds.

Young people’s unemployment is still one of the biggest challenges in South Africa.

Godongwana says the government should look at many tools in the system to resolve this issue.

The Minister mentions tax incentives as examples of the tools that can be used to fulfill this goal.

Below you can see the interview with the Minister in its entirety:

Low economic growth prevents governments from paying off their debts: Government – SABC News

Source link Low economic growth prevents governments from paying off their debts: Government – SABC News

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