Since late last year, this publication has been championing the public infrastructure programme as South Africa’s main economic stimulus opportunity.

We have written over and over again that government departments and State-owned enterprises must be given the strongest possible signal that they need to continue with their previously-announced implementation schedules, and even seek to enlarge there programmes.

The idea was to provide something of a countercyclical buffer against the inevitable slowdown, as well as to use the “breathing space” provided to move beyond the so-called ‘catch-up’ phase and begin preparing to supply infrastructure ‘ahead of demand’.

For this reason, I were pleased that Finance Minister Trevor Manuel confirmed last week that government spending on infrastructure would total R787-billion over the next three years.

I was doubly pleased by the announcement of a further R6,4-billion for public transport, roads and rail networks; R4,1-billion for school buildings, clinics and other provincial infrastructure projects; and R5,3-billion for municipal infrastructure and bulk water systems.

What was also positive was that most of the projects were said to be well beyond a conceptualisation stage, which should mean that real implementation should not be delayed by scoping and regulatory processes.

There is one that key issue that is concerning me, though, and is funding.

All of the State enterprises face material funding gaps that will not be closed by price increases, while the prospect of material equity injections from the shareholder is dim.

In other words, there is going to have to be a heavy reliance on debt finance.

Now, it is true that South Africa’s capital markets have shown remarkable resilience in the face of the global financial meltdown. It is also true that there is still capacity and appetite for domestic bond issues.

However, in the final analysis, South Africa is going to have to resort to foreign borrowings at a time when access is constrained and the costs associated with debt finance is rising.

Indeed, Manuel alluded to the size of the task when he indicated that the public sector borrowing requirement for next year was expected to be 7,5% of gross domestic product, or some R186-billion. The capital will have to be secured from domestic institutions, investors, multilateral institutions and portfolio inflows from abroad.

This is a tall order in the current environment and might well still serve to undermine the strong political will demonstrated around infrastructure delivery.