denominated in foreign currency. there is also renewed concern about the sustainability of rising debt levels on the continent. the world bank ’ s 2020 international debt statistics2 has designated ssa as the region with the fastest - growing debt levels in the world, the pace of increase raising concerns about debt sustainability on the continent. according to the international monetary fund ( imf ), about 40 % of countries on the continent are currently at distressed levels. a reflection on conjectural policy challenges at the global level, the covid - 19 pandemic forced a strong fiscal response by many countries in an effort to avert lasting structural damage to the economy. however, the 1 world bank, june 2020, global economic prospects. 2 world bank, 2020, 2020 international debt statistics, available at https : / / datatopics. worldbank. org / debt / ids / region / ssa. page 2 of 11 recessionary conditions, coupled with the significant deterioration in the economic outlook in many countries, have refocused our attention on the record - breaking debt metrics. global debt, both public and private, increased to us $ 253 trillion in the first quarter of 20203, with the public sector accounting for around 60 % of these issuances. by way of comparison, global debt amounted to us $ 291 trillion at the end of the fourth quarter of 2008. according to the age - old adage that ‘ history serves as a mirror so that we can avoid past tragedies ’, such is the didactic character of debt oscillations. with each wave of debt comes a composite reflection of causes, consequences and possible lessons for market participants and policymakers alike. a recent publication by the world bank, titled global waves of debt : causes and consequences4, is instructive in this regard. according to the world bank, there have been four debt waves in the post - bretton woods period. the first wave was fuelled by a low - interest rate environment and rapid growth in syndicated loans, which induced governments to accumulate high levels of debt during the 1970s and 1980s. this had negative implications for the health of the banking sector in lending countries, mainly the united states ( us ), and culminated in a debt crisis, which was followed by a prolonged debt relief and debt restructuring episode. the second global debt wave emerged between 1990 and the early 2000s, and occurred against a backdrop of financial liberalisation and innovation that enabled banks and corporations in the east asia and

datatopics. worldbank. org / debt / ids / region / ssa. page 7 of 11 the strategy entails reducing borrowing costs and risks through increasing liquidity, managing maturity profiles, diversifying funding instruments, increasing transparency and information flows, and building credibility among market players. national treasury took specific actions to achieve these price and maturity benefits. one of the first steps was the consolidation of government bonds into benchmark bonds, as well as the development of the yield curve. there was also a deliberate focus on deepening the secondary market for government securities, where the south african reserve bank ( sarb ) played an important role by acting as a market maker and a funding agent in a number of benchmark government bonds. at its peak, the sarb ’ s participation in the secondary market accounted for an estimated 30 % of total bond turnover. by the late 1990s, the secondary market was judged to be sufficiently mature for the sarb to reduce its involvement and to improve efficiency and transparency. when the global financial crisis hit in 2008 / 09, south africa had been running small budget surpluses. the debt - to - gdp ratio was under 30 %. this allowed for increased government spending, part of which was initially justified as countercyclical stimulus, but which was not subsequently reversed. persistent fiscal deficits have since caused a dramatic increase in the debt - to - gdp ratio, which incidentally is larger than that of other emerging markets, except argentina. some attempts at fiscal consolidation were made over the decade. however, these were underpinned primarily by tax increases, while aggregate spending kept growing or at least failed to decline as a share of gdp. the main drivers were above - inflation growth in the public sector wage bill, rising interest costs, and bailouts for insolvent state - owned enterprises ( soes ). in short, the domestic fiscal position was already highly challenging before the covid - 19 crisis, with the 2019 / 20 fiscal deficit being 6. 7 % of gdp and the debt - to - gdp ratio at 63. 5 %. the covid - 19 shock is now projected to result in a budget deficit of 14. 6 % of gdp, and is widely expected to increase the debt stock past 80 % of gdp for the current fiscal year. as is pointed out in the revised budget, there are significant risks of debt page 8 of 11 exceeding 100 % of gdp in a passive scenario over the next few years – unless government implements strong corrective