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The IMF visited SA recently and concluded that the projections in the February budget were not conservative enough, and the government debt ratio would not stabilise over the medium term as Treasury had forecast. The fund’s economists therefore want to see the government taking additional steps to cut government debt. They propose that SA set itself a debt ceiling that would mean cutting government debt by up to one percentage point over the next three years — equivalent to a sizable R50bn of spending cuts and/or tax hikes — to "ensure that debt remains at comfortable levels and policy buffers are replenished". It’s all good advice in theory. But in practice the Treasury is under massive fiscal pressure and has much more immediate problems on its plate, starting with Friday’s public sector pay settlement, which the government estimates will cost R30bn more than it had budgeted.In February Treasury budgeted an extra R110bn for the wage bill, but that assumed a pay hike of exactly the...

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