At the start of the democratic project, South Africa hoped for a “fiscal renaissance”. After a brief period of consolidation, social spending rose, as did remuneration for public servants and expenditure on infrastructure. By the early 2000s, revenue was buoyant, the debt-to-GDP ratio was at historic lows, and the budget balance moved into surplus. But by the second decade of the millennium, growth faltered. And at the very moment that conditions demanded fiscal adjustment, government policy became increasingly incoherent.
This is the first in a series of four articles exploring the background, dimensions and possible policy options to the fiscal crisis South Africa faces. It is edited into extracts from a long paper prepared by the author as part of the SA Future Economy project at the Wits School of Governance.