Fiscal crisis: Why we should be afraid
SA is teetering on the brink of a fiscal cliff. Should populist policies prevail, low growth and rising debt could be the country’s undoing
SA has entered an unsustainable debt spiral and the only way out is through improved confidence and higher growth — two elements that are being held hostage to the deteriorating political climate. The fiscal noose the country has made for itself is tightening. Next month at the midterm budget review a projected revenue shortfall of about R44bn for the 2017 fiscal year is likely to be announced. Unless finance minister Malusi Gigaba responds by lowering the expenditure ceiling and announcing pro-growth reforms, SA likely faces further ratings downgrades early next year. This is the message contained in a hard-hitting report released last week by Nedbank Corporate & Investment Bank research analyst Reezwana Sumad. It was followed closely by an equally dispiriting research note from Moody’s ratings agency.WHAT IT MEANS:SA’s fiscal crisis is deepening, with Moody’s warning against ‘radical economic transformation’Its commentary was in response to the recent revelation by Stats SA that p...
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