–– Mark Christopher
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Proverbs 22:7 declares the following truism: “The rich rules over the poor, And the borrower becomes the lender’s slave.” This truism extends to individuals and governments alike. Last week’s mid-term budget speech on November 1st by the minister of finance was a good reminder of the peril of falling prey to the pernicious consequences of the debt cycle whereby more is spent than one has money for.
Over the last several years, the South African government has continued to spend far more than it collects in annual tax revenue. This has snowballed with government having to borrow money it doesn’t have to make up for the annual shortfalls. This money is borrowed from various global financial institutions like the World Bank and the International Monetary Fund.
The South African government is now nearly 5 trillion rands in debt and growing annually. Since the budget speech in February of this year, the debt has grown by another 250 billion rands. This means that every man, woman, and child in South Africa owes 83,333.00 rands per person (calculated by 60 million people).
By 2025 the national debt is projected to exceed 6 trillion rands. At present, the government spends about 20% of the annual national budget of 2.3 trillion rands on servicing that debt through loan and interest payments. To make matters worse, the government’s plan to address this growing concern is to borrow another 553 billion rands yearly over the next few years to try and tread the rapidly rising flood waters of accumulated debt.
One might ask, “So, what is the big deal? Why should I be concerned about this? It is the government’s problem, not mine.” To begin with, it is highly irresponsible as the taxpayer’s money has been recklessly squandered with little prospect of ever resolving the matter. Further, when a country does not live within its means, it leaves a debt obligation that must be paid by future generations. It amounts to taking money now for current projects but sending the bill to the next generation.
This is a classic case of the borrower becoming a slave to the lender. In short, irresponsible spending by the government is limiting both growth and opportunities for future generations. It is neither fair nor prudent. It is creating a situation that is ripe for civil unrest as the economy worsens. The poor will get poorer as the middle-class are adversely affected.
So, how can the government get out of the vicious debt cycle that it has dug itself into? One way is through increased taxation. However, in a country that already has a very high tax rate, this will only further hamper economic growth as expendable income is confiscated in taxes.
Reduced spending is one effective way to reduce deficit spending and the overall national debt. But this would mean the government reducing money given to the various governmental departments and agencies as well as curbing social services while cutting service sector pay. This would serve as a recipe for civil unrest.
The government could also go through debt restructuring whereby those owed money by the government agree to take less than contracted for. However, the downsides of this approach are numerous.
The way that most governments try to resolve their national debt dilemma is by monetizing the debt. This is where the government prints more money and floods the system with money that has no backing or value. This always leads to inflation and the devaluation of a nation’s currency. Zimbabwe is a good example of what happens when a country monetizes its debt. It leads to financial ruin.
The final mechanism to solve the debt crisis is through defaulting on the money owed. This really amounts to a form of theft and leaves the creditors holding the bag. Psalm 37:21 addresses those who default on what is owed, “The wicked borrows but does not pay it back.”
Considering the debt crisis, what can Christians, in debt-laden countries like South Africa, do? To begin with, the believer in Christ is told in Romans 13:7 to pay his or her taxes. Secondly, practice good biblical stewardship when handling your own finances. Live within your means and if you are in debt get some good counsel on how to best get out of debt.
Also, be careful who you vote for come election time. Voting for those who will continue to enslave the country economically is to be complicit in their sin. Make an informed choice when you vote. And finally, pray for our current leaders. Pray they would wake up to the precarious nature of the financial situation they have put us in and pray that they would begin to intentionally address the situation in a meaningful way. This of course will mean short-term pain but long-term gain for us all, and especially for those who come after us.