South Africa's DA Would Trim State's Size to Curb Debt to GDP

Nejra Cehic and Manus Cranny

(Bloomberg) -- The Democratic Alliance, South Africa’s biggest opposition party, would reduce the size of the government to help curb the country’s ratio of debt to gross domestic product, leader Mmusi Maimane said.

The continent’s most-industrialized economy has to “deal with the question of a bloated state,” he said in an interview on Bloomberg TV Thursday, three weeks before general elections. Given the opportunity, the party would also sell state-owned companies, allowing international partners to invest in them, he said.

Several government-controlled firms are in financial distress and have asked for support, placing pressure on national accounts. The National Treasury has cut economic growth forecasts, plans to curb state spending and won’t provide tax relief for citizens as it seeks more funds to prop up debt-laden state companies, including yet another record bailout for power utility Eskom Holdings SOC Ltd., which has struggled to keep the lights on.

The ratio of government debt to gross domestic product is expected to exceed 60 percent for the first time on record in 2023-24 as tepid economic growth and administrative difficulties hinder tax collection, the National Treasury said in its Budget Review in February.

The DA has gained control of some of the country’s main cities after working with smaller political parties following municipal election in 2016 that saw the ruling African National Congress’s support slump to a record low of 54 percent.

The DA would only consider coalitions with the ANC if the governing party were to reform, which would have to include firing leaders who have been implicated in corruption, Maimane said.

“In it’s current state, with a number of people facing criminal charges, it would be disingenuous of me to coalesce,” he said.

To contact the reporters on this story: Nejra Cehic in London at ncehic@bloomberg.net;Manus Cranny in London at mcranny@bloomberg.net

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Ana Monteiro, Gordon Bell

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