This archive report was first published on 2 November 2019.
South Africa's economy is facing a perfect storm of challenges, with high debt, low revenue, and a struggling state-owned utility, Eskom, at the forefront of the country's woes.
According to Finance Minister Tito Mboweni, the country's national debt could reach $300 billion by 2023, accounting for 70% of the GDP, while revenue from tax is down by more than $3 billion and is projected to fall again in the next fiscal year.
One of the major concerns is Eskom, which is losing money due to poor management and outdated electricity-generating systems. The utility, which is Africa's largest, with 46,000MW of installed capacity but running only at about two-thirds efficiency, seems impossible to render profitable.
Stabilising Eskom and its finances is critical for the recovery of South Africa's economy, but the government's efforts are being hindered by the country's bloated public wage bill and the opposition from unions and communist allies of the ruling African National Congress.
President Cyril Ramaphosa's administration has almost nowhere left to go but take the austerity route, but that road is almost certain political disaster against the backdrop of an already restive population.
As Mboweni noted, things are not looking good, and the country is effectively broke, with the only prospect of some future turnaround keeping foreign investors interested.
However, convincing South Africans that cutting back public spending is the only answer to the country's woes will be a significant challenge for Ramaphosa and his team.
