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Ideologies befuddle state thinking as SA tumbles in a ...


Ideologies befuddle state thinking as SA tumbles in a slow-motion crash

The treasury will try to fix it, but the SOE rot will deepen and the state will become more grossly inefficient

Peter Attard Montalto

SA has never had macro-level austerity in any real sense in recent years. Expenditure has continued to grow even in real terms in every year bar a small dip in 2016/17. Indeed, expenditure this fiscal year will grow about 11.6%, including the special appropriations bill.

This was the fallacy of the Pravin Gordhan’s years of fiscal “prudence”, which were driven off a non-credible view of long-term potential growth, backed up by analysts blindly accepting the paradigm.

Ratings agencies, such as Fitch Ratings last Friday, will now drive the reality home: growth in per-capita terms is at best around zero (that is, headline growth around 1.7%) in the coming years...

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