SANISHA PACKIRISAMY: South Africa’s path of fiscal (un)sustainability
With spending outpacing revenue, the government is in a fiscal bind. Difficult trade-offs, greater spending efficiency and accelerated structural reforms offer a way out
South Africa is facing a conundrum: the government’s financial equation doesn’t balance, with spending exceeding the revenue it is able to collect in a pedestrian economy. Economic mismanagement has cast a shadow, creating an array of intractable constraints. These include debilitating electricity shortages and logistical bottlenecks that stifle economic activity, persistent policy ambiguity hindering investment prospects and alarming levels of unemployment, contributing to a widening gap in inequality.
After the global financial crisis of 2008, real growth in GDP in South Africa decelerated markedly. It has struggled to regain momentum since then, hovering at an average annual rate of 1.3%. Per capita growth, according to the International Monetary Fund (IMF), has essentially stagnated over this period, leaving average South Africans no better off than they were 15 years ago. ..
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