You can also listen to this podcast on iono.fm here. ADVERTISEMENT CONTINUE READING BELOW JEREMY MAGGS: All right, let’s stay with the economy and our next guest writing at the weekend that over the past decade, the interest rate that South Africa pays on its debt has consistently been above the economic growth rate. Mathematically, he says, this means that debt grows as a percentage of GDP, and it becomes a vicious circle.
ROY HAVEMANN: Ja, good afternoon, Jeremy, and thank you very much. I think just to build on what Annabel Bishop has just much more eloquently explained than me, which is obviously the economic growth in South Africa is currently very weak. I think correctly it has stalled.If you think about the consequence of that on the debt trajectory for South Africa, very obviously there are two things that happen. Firstly, the denominator on debt-to-GDP gets worse because GDP doesn’t rise.
JEREMY MAGGS: What are the main difficulties or challenges then, Roy, to try and break out of that cycle? How difficult is it? JEREMY MAGGS: So how difficult then is it to target that primary surplus? Where do you start and where do you cut, particularly with the focus on being the stabilisation of public debt?
JEREMY MAGGS: All of this is a philosophical argument as well, Roy, I would contend, because we do have a clear fiscal strategy, there is a commitment to stabilising debt, yet we don’t seem to be able to get out of the starting block.