- South Africa’s fiscal crisis is a result of rapidly rising public spending in an era of slow economic growth, but the accumulation of debt is now slowing economic growth.
- Government’s response to the fiscal crisis has been inadequate: it has not reined in spending sufficiently, and the increase in tax rates has not resulted in higher revenues because of the crisis in SARS and slowing growth.
- Public sector debt now exceeds R3 trillion, up from R900 billion in 2009 and R210 billion in 1992. This is more than 60% of GDP.
- To address the crisis, government needs to tackle rising public spending. It also needs to ensure that the SOCs, and the industries in which they operate, are restructured.
- Unless a new growth strategy is embraced, SA will be unable to stabilise public debt. Faster growth needs to be the primary goal for all policy.
