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Protesters Burn Truck Leaving Driver Jobless: N12 Incident in Gauteng

South African government destroyed R192 billion in a year Efficient Group chief economist Dawie Roodt says the South African government is a massive destroyer of capital. He made the statement during a presentation about the 2025 Budget delivered by Finance Minister Enoch Godongwana on Wednesday, 12 March. “The South African government destroys approximately R200 billion annually by borrowing long-term and spending it on short-term items,” he said. He explained that funding short-term expenditures through long-term borrowing is the same as destroying capital. Ideally, the state should fund short-term expenses through short-term borrowing or available liquid assets. When the state uses long-term borrowing to cover short-term costs, it creates a mismatch in the time horizon of the liabilities. Over time, it leads to financial strain as the debt accumulates interest and becomes more challenging to service. This is exactly what happened in South Africa. Godongwana said in his 2025 budget speech that government debt is expected to reach 76.2% of South Africa’s gross domestic product (GDP) in this financial year. Over the last financial year, debt-service costs amounted to R389.6 billion. This translates to 22 cents of every rand the country raises in revenue. “It is more than what we spend on health, the police and basic education,” Godongwana told parliament. “We must reverse this trend and prevent the cost of debt from draining resources that could otherwise be spent on our pressing social needs or on investing in growth,” he said. However, South Africa is not off to a good start. Debt-servicing costs will increase to R424.9 billion in the next financial year. This 9% increase in South Africa’s interest payments is one of the fastest-growing items in the 2025 Budget. Roodt highlighted that the government also has implicit and explicit debt obligations linked to state-owned enterprises. “There are implicit and explicit that finance minister Enoch Godongwana must include in his outstanding debt estimates. He does not do that,” Roodt said. South Africa has R770 billion in guarantees to state-owned enterprises, which are not included in the debt levels Godongwana shared. Godongwana admitted that taking on additional debt to meet the spending pressures was also not feasible. “The amount is simply too large. The cost of borrowing would be unaffordable,” the minister said in his budget speech. “Our sub-investment credit rating would also make this level of borrowing costlier and put us at risk of even further downgrades.” The government has been exploring strong fiscal policy anchors to help prevent a recurrence of the cycle of high spending, high deficits and high debt. “At present, a primary budget surplus sufficient to stabilise debt has been adopted as the anchor,” he said. “However, the obligation to keep public debt stable is not explicit in South Africa’s legal and regulatory framework.” In this regard, the government is releasing, along with the budget, a discussion document presenting options for such an anchor. The Finance Minister expects the consolidated budget deficit to narrow from 5% of GDP in 2024/25 to 3.5% of GDP in 2027/28. The chart below shows the government deficit, which has been a regular feature over the last fifteen years.

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Protesters Burn Truck Leaving Driver Jobless: N12 Incident in Gauteng

Published

2 years ago

on

August 4, 2023

By

Tia Sauls

eldorado park -Protesters Burn Truck Leaving Driver Jobless: N12 Incident in Gauteng

A truck driver and his colleagues narrowly escaped harm when their vehicle was set ablaze by protesting residents demanding services on the N12 near Eldorado Park.

When the violent incident occurred, Melusi Geba and three others were en route from Lenasia in Johannesburg south to Germiston as reported by News 24. The protest took place on the N12 freeway, led by residents from Slovo Park informal settlement opposite Eldorado Park, who had been demonstrating for nearly a week, obstructing morning and evening traffic flow.

Also Read: Cape Town Taxi Strike: Man Falls Off Overcrowded Bus in Incident

Geba recounted the terrifying moment when the residents attacked their truck while they were transporting sweets and chips to Germiston. Despite their attempts to avoid the confrontation, the angry crowd trapped and mobbed them, who looted the truck and even took their personal belongings.

The aftermath has left Geba and his crew deeply concerned about their employment, as their employer is furious over the loss of the truck. They fear losing their income due to the impact of these protests on truck drivers.

Expressing their frustration, Geba questioned why protesters resort to violence, targeting innocent drivers who simply earn a living to support their families. He emphasised that their trucks have no connection to service delivery, making the attacks unjustified and devastating.

Following the incident, clashes erupted between the police and the stone-pelting protesters, further escalating the tension on the N12 freeway.

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South African government destroyed R192 billion in a year Efficient Group chief economist Dawie Roodt says the South African government is a massive destroyer of capital. He made the statement during a presentation about the 2025 Budget delivered by Finance Minister Enoch Godongwana on Wednesday, 12 March. “The South African government destroys approximately R200 billion annually by borrowing long-term and spending it on short-term items,” he said. He explained that funding short-term expenditures through long-term borrowing is the same as destroying capital. Ideally, the state should fund short-term expenses through short-term borrowing or available liquid assets. When the state uses long-term borrowing to cover short-term costs, it creates a mismatch in the time horizon of the liabilities. Over time, it leads to financial strain as the debt accumulates interest and becomes more challenging to service. This is exactly what happened in South Africa. Godongwana said in his 2025 budget speech that government debt is expected to reach 76.2% of South Africa’s gross domestic product (GDP) in this financial year. Over the last financial year, debt-service costs amounted to R389.6 billion. This translates to 22 cents of every rand the country raises in revenue. “It is more than what we spend on health, the police and basic education,” Godongwana told parliament. “We must reverse this trend and prevent the cost of debt from draining resources that could otherwise be spent on our pressing social needs or on investing in growth,” he said. However, South Africa is not off to a good start. Debt-servicing costs will increase to R424.9 billion in the next financial year. This 9% increase in South Africa’s interest payments is one of the fastest-growing items in the 2025 Budget. Roodt highlighted that the government also has implicit and explicit debt obligations linked to state-owned enterprises. “There are implicit and explicit that finance minister Enoch Godongwana must include in his outstanding debt estimates. He does not do that,” Roodt said. South Africa has R770 billion in guarantees to state-owned enterprises, which are not included in the debt levels Godongwana shared. Godongwana admitted that taking on additional debt to meet the spending pressures was also not feasible. “The amount is simply too large. The cost of borrowing would be unaffordable,” the minister said in his budget speech. “Our sub-investment credit rating would also make this level of borrowing costlier and put us at risk of even further downgrades.” The government has been exploring strong fiscal policy anchors to help prevent a recurrence of the cycle of high spending, high deficits and high debt. “At present, a primary budget surplus sufficient to stabilise debt has been adopted as the anchor,” he said. “However, the obligation to keep public debt stable is not explicit in South Africa’s legal and regulatory framework.” In this regard, the government is releasing, along with the budget, a discussion document presenting options for such an anchor. The Finance Minister expects the consolidated budget deficit to narrow from 5% of GDP in 2024/25 to 3.5% of GDP in 2027/28. The chart below shows the government deficit, which has been a regular feature over the last fifteen years.