The current political economy and the recent uncertainty between the presidency and national treasury is fomenting new financial and economic scenarios for SA.
Government’s official policy is aimed at creating and establishing fiscal consolidation and fiscal discipline.
National government has however, lost the fight against corruption, inflation and job creation. This is the result of having an official policy on the one hand but in practice we are seeing signs of government taking a path leading towards fiscal expansion, fiscal erosion and eventually, I believe, towards a fiscal cliff.
SA faces three potential scenarios which must, at all costs, be avoided.
* Recession; and
* Fiscal crisis.
If the "state capture" saga and state guarantees to failed state-owned enterprises continue, it is more than likely that once downgrading kicks in it will have a domino effect with devastating consequences for the economy and more than likely push our economy towards a fiscal cliff.
The president and his cabinet have shown that they simply do not care enough while others, particularly those in the parastatals, seem determined to continue looting the state’s coffers.
SA must radically change its fiscal path towards fiscal discipline, fiscal consolidation, and fiscal sustainability. The finance minister must be left to do his work and create stability within treasury.
SA must urgently do something fundamentally different to avoid a possible downgrade, a recession and a fiscal crisis.
MEC for finance, Western Cape government