Why the erosion of the Treasury will affect every citizen of SA
Irresponsible fiscal policy can quickly lead to less money for social grants and higher prices, write Nazmeera Moola and Khaya Gobodo
While analysts and investors are hyperventilating about the removal of Pravin Gordhan as finance minister, it is sometimes difficult for the public to understand the effect of a sharp change in the direction of fiscal policy on each and every person in SA. It may be easy for some in politics to dismiss the opinions of credit ratings agencies or foreign and local investors. However, irresponsible fiscal policy can quickly lead to less money for social welfare grants and higher prices for the most basic goods and services. SA’s history offers an excellent lesson in the dangers of unsustainable policy. The catalyst for the end of apartheid was not an attack of conscience by the National Party — it was the pragmatic realisation that they were running out of options. After a decade of sluggish growth, the South African state was on the verge of bankruptcy in 1994 — a situation worsened by the large budget deficits the apartheid government incurred in its final years. Between 1994 and 200...
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