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  • For the first time, National Treasury called for public submissions prior to the Medium Term Budget Policy Statement, taking place on 11 November 2021. CDE made a submission on 17 September 2021, South Africa’s fiscal policy choices.
  • Like National Treasury, CDE believes that SA’s public finances are not sustainable. The country has a large, persistent deficit which emerged after 2009, and which has resulted in a rapid increase in debt.
  • Our view that there are only two ways to address the unsustainable character of our public finances: accelerated fiscal consolidation and faster economic growth.
  • In CDE’s view – and in the view of most analysts – the rapid growth in revenues in the mining sector reflect a range of temporary conditions, which means that the unexpectedly rapid recovery in tax revenues this year needs to be treated as a temporary windfall. In any event, even with this windfall, SA’s deficit will remain extremely wide.
  • Left unchecked, the relentless rise in debt will eventually lead to even steeper costs that will involve some combination of a fiscal crisis, a financial crisis, a crash in asset prices, and/or a rise in inflation. Alone or in combination, a crisis that manifested in any or all of these forms would devastate SA’s economic prospects for a generation.
  • In the face of this risk, we simply cannot afford complacency. We must address the country’s underlying macroeconomic imbalances.