October 9,2024

South Africa Faces Imminent Financial Crisis Due to Rising Debt, Warns Economist Dawie Roodt

Economist Dawie Roodt has raised alarms about South Africa's escalating debt burden, cautioning that the country is on the brink of a financial crisis. Speaking on The Phumlani Majozi Show, Roodt highlighted that public debt stands at approximately 75% of South Africa's gross domestic product (GDP). When factoring in the debt from state-owned enterprises and local authorities, the total debt burden approaches 90% of GDP.

Roodt explained that the finance minister would likely need to bail out numerous state-owned enterprises and municipalities facing severe financial difficulties. He noted that the debt increases by 2% to 3% of GDP annually, requiring continuous funding. "One day, lenders will refuse to fund our deficits, saying, 'You owe too much money and cannot repay it,'" Roodt warned. "This is the financial crisis I am referring to, and it will happen if we stay on this path."

Roodt emphasized that South Africa cannot sustain its current spending levels, stating, "The money is finished and klaar. There is no money."