Warnings about SA’s push towards the fiscal cliff went unheeded for years
Government expenditure on social grants, wages and interest on debt spiked while growth underperformed
The supplementary budget tabled in June indicated that SA’s existing dire fiscal position had taken a turn for the worse. The Fiscal Cliff Study Group (FCSG) has been warning since 2014 that SA’s public finances were developing in an unsustainable way. The growth in government revenue could not match the growth in spending, thus pushing government finances to the proverbial cliff.
Despite not having a clear academic definition, the term fiscal cliff was used in 2012 by Ben Bernanke (then governor of the US Federal Reserve) to symbolise the impact the coinciding end of various tax incentives would have on the US economy. It is thus a situation in which problems in public finances spill over to the real economy. ..
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