When the Treasury projects how much it will cost to service our public debt, it has to make assumptions about the global risk environment and the additional return that investors are likely to demand to compensate them for our country’s perceived level of risk. Over the last year, South Africa’s sovereign credit default swap rates, which measure the annualised cost of insuring against sovereign default, have been higher than 2021 levels and higher than what Treasury expected. This would have increased borrowing costs all other things equal, so it will be interesting to see the Treasury’s updated borrowing projections from today’s budget and their assessment of the outlook for public debt and borrowing costs.
