Net debt currently stands at around 2.28 trillion rand ($160 billion), or 48.6 percent of GDP, according to the treasury.
South Africa’s Finance Minister Tito Mboweni faces a balancing act ahead of his maiden budget speech on Wednesday, to reassure investors over the country’s troubled public electricity company without alienating union allies ahead of national elections.
He is under pressure to bail out the state power utility Eskom, along with its $30 billion mountain of debt, which is at the centre of the country’s mounting economic troubles.
Mboweni will deliver his maiden budget to parliament in Cape Town at 1200 GMT. Analysts warn of tensions that may emerge should the restructuring lead to job losses.
President Cyril Ramaphosa announced this month that the utility would be divided into three, but unions have rejected that, saying it would lead to job cuts.
Over the past few weeks, the utility has implemented a nationwide programme of rolling blackouts as it failed to meet demand.
The scale of the power outages, unseen in more than a decade, has rocked the continent’s most industrialised nation, plunging businesses, homes and traffic lights into darkness.
But the ruling African National Congress (ANC) has been warned by its coalition partner, the Cosatu trade union federation, that sackings could damage their alliance ahead of national elections due on May 8.
“We remain totally opposed to any restructuring plan that will benefit the capitalist class and increase prices for the working class,” said spokesperson Sizwe Pamla.
‘Ramaphosa indicated last week that details of government’s rescue plan, which will be designed to stave off another damaging credit rating downgrade, would be revealed in Wednesday’s budget.
Fears are mounting that if Eskom defaults on its massive debts, lenders would be entitled to call back other loans to different parts of the state including the troubled national carrier South African Airways (SAA).
Fraud, corruption, and incompetence have gripped public sector businesses and compromised their credibility while mounting debts have spooked investors.