South Africa should with great earnestness take note of what has happened to the Greece economy as its own debt burden and anti-growth plans are sending the country to an economic implosion just like a Titanic into an iceberg Adv. Anton Alberts, the FF Plus parliamentary person on the economy says.
Adv. Alberts said South Africa’s economy is experiencing new and worrying low points with a fast increasing debt burden while thee is still no chance of a change of direction with the ANC in control of the economy.
The latest consumer confidence index of FNB and the Bureau for Economic Research indicates that consumer confidence in the second term of this year had dropped to its lowest level in 16 years. Some of the reasons blamed for this include social and political unrest, the power crisis and the weaker rand.
The index had in the first term had weakened from zero to -4 in the first quarter. In the second term the index dropped to a level of -15 index points. The current level of -24 is the lowest since the recession of 1992/1993 when it stood at -25 index points.
It is against this background that the medium term forecast (which had recently been undertaken by the research unit of Solidarity) was that debt would increase by about 31% from R1,8 trillion in 2014/2015 to R2,3 trillion in 2017/2018.
The movement in the country’s debt to GDP ratio of 31,6% in 2009/10 to 46% in 2014/25 is definitely also busy going unnoticed by international credit agencies. State expenditure has on average increased by 10,1% annually in the past ten years with a growth rate of only 7,7% in state revenue, according to the researchers.
Adv. Alberts says that if the current situation continues, South Africa will only have enough money in 2026 for public salaries and welfare, according to Prof. Jannie Rossouw, former deputy chief governor of the South African Reserve bank and now head of the Wits School for Economic and Business Sciences.
“The fiscal iceberg is however just one of many that could sink South Africa’s economy. Others could speed it up and the largest of it all is the power iceberg which is already brushing against the bow.
“There are also threatening water shortages which will soon have a larger impact than that of the power shortages, the collapse of services, food shortages for various reasons, corruption and various other smaller ones, such as shortage of coal for power generation.
The ANC is visibly busy destroying the economy. To whom will South Africa be reaching out to rescue it? The ANC can in advance leave the African Union out of this calculation,” Adv. Alberts says.
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