FISCAL SUSTAINABILITY
CLAIRE BISSEKER: The way to restore business confidence
SA is pushing at its fiscal limits, having wiped out nearly all the fiscal progress it has achieved since 1994. This is mainly the result of years of unsustainable spending on a burgeoning but unproductive government in a low-growth environment. This is not to say that SA is facing an imminent fiscal crisis. At about 50% of GDP, the government’s debt is not especially large, it is also mostly denominated in rand and the country is easily able to borrow. But in an environment of rising interest rates and very low growth, Finance Minister Malusi Gigaba is fast running out of breathing room. That he is a fiscal-policy novice who lacks credibility makes the situation that much more serious. At the heart of nearly all of SA’s economic problems is the fact that growth has been too slow for too long, having averaged just 1.6% between 2011 and 2016. The upshot is that revenue collection has fallen short of the Treasury’s forecasts in four of the past five years. This, coupled with unsustain...
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