The recent weakness in economic growth, if it persists, threatens to cause some fiscal slippage this fiscal year, which could set in motion further tax hikes. But the real problems await further down the line should SA fail to stage a meaningful economic recovery over the next few years. There is a misapprehension that the 2018 budget, which hiked VAT, snatched SA from the jaws of a debt trap and put the country on a sustainable fiscal path. While it certainly did the former, the fiscal risks have not gone away and SA’s long-term fiscal sustainability is far from secured. Earlier in the year, pervasive optimism over the improving growth and political outlook raised the expectation that SA could look forward to positive credit-rating dynamics taking hold. Realism has since set in. The concern is that downward pressure on SA’s credit ratings will again start to build due to disappointing growth, high unemployment and the country’s weak fiscal position, says Matrix Fund Managers macro ...

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