CLAIRE BISSEKER: Time for SA to bite the bullet of real fiscal consolidation
SA will not achieve sustainability until it deals with the political constraints that prevent hard decision making
There is a simple explanation for the shocking deterioration in SA’s public finances: growth has been too slow for too long and, instead of cutting expenditure to bring it in line with the reduced revenue-generating capacity of the economy, SA has indulged in fake consolidation.
On the surface, the fiscal consolidation of the past five years looked real enough. After all, the Treasury imposed a hard expenditure ceiling on the government and almost always stuck to it. But it simultaneously allowed the public wage bill to balloon and state-owned enterprises to run amok, and introduced new unfunded policies at every turn.