South Africa is teetering on the edge of a financial abyss, with leading economists and policy experts sounding the alarm that the country has run out of money. Ann Bernstein, executive director of the Centre for Development and Enterprise (CDE), delivered a stark warning at the 2025 Biznews Conference, highlighting the dire state of the nation’s finances.
Bernstein, a respected commentator with extensive experience working with institutions like the World Economic Forum and the Brenthurst Foundation, minced no words. She criticized the government’s failure to cut spending as promised, instead opting for tax hikes and unsustainable wage increases for civil servants.
“We are living beyond our means,” Bernstein declared, urging South Africa to adopt drastic measures akin to those proposed by Argentinian President Javier Milei, who famously campaigned under the slogan, “We have no more money.”
The Root of the Problem
The 2025 Budget, presented by Finance Minister Enoch Godongwana, abandoned earlier commitments to reduce spending. Instead, it introduced a VAT increase and allowed for personal income tax bracket creep, further burdening an already strained population.
Bernstein pointed to two major drains on the national budget: localisation and Black Economic Empowerment (BEE) laws and Sector Education and Training Authorities (SETAs).
- BEE Laws: These policies, while aimed at addressing historical inequalities, have cost the country hundreds of billions. Bernstein estimates that scrapping BEE requirements could save over R50 billion in three years.
- SETAs: Described as “corrupt” and “useless,” SETAs have failed to deliver on their mandate. Bernstein argued that defunding them could save R80 billion.
A Growing Debt Crisis
The situation is further exacerbated by South Africa’s skyrocketing debt levels. Government debt is projected to reach 76.2% of GDP this financial year, with debt-service costs consuming 22 cents of every rand earned in revenue. By next year, these costs are expected to rise to R424.9 billion, a 9% increase from the previous year.
Dawie Roodt, chief economist at Efficient Group, echoed Bernstein’s concerns. He warned that South Africa’s fiscal debt is spiraling out of control, with the government’s implicit and explicit obligations to state-owned enterprises adding to the burden. Roodt highlighted that R770 billion in guarantees to state-owned enterprises are not even included in the official debt figures.
No Easy Solutions
Finance Minister Godongwana admitted that borrowing more money is not a viable solution. “The amount is simply too large. The cost of borrowing would be unaffordable,” he said during his budget speech. With South Africa’s sub-investment credit rating, further borrowing could lead to even more downgrades, deepening the crisis.
Bernstein and Roodt agree that the government must take spending cuts seriously and set clear targets for reducing expenditure. Without immediate action, South Africa risks plunging into an even deeper financial disaster.
The Road Ahead
The warnings from Bernstein and Roodt are a wake-up call for South Africa. The country’s financial crisis is not just a matter of numbers—it’s a threat to the livelihoods of millions. As Bernstein put it, “We need to be honest about our situation and take bold steps to address it.”
The question remains: Will the government heed these warnings and act before it’s too late?
South Africa’s financial crisis is a complex issue with no easy fixes. However, experts like Ann Bernstein and Dawie Roodt have laid out clear steps to mitigate the damage. From cutting wasteful spending to reforming ineffective policies, the time for action is now.
The stakes are high, and the clock is ticking. South Africa’s future depends on the choices made today.
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