Twenty-year review of South African fiscal policy: A tale of two sustainabilities

Philippe Burger and Estian Calitz

Development Southern Africa, 2015, vol. 32, issue 6, 639-657

Abstract: In 2014 democracy in South Africa was 20 years old. The democratic government in 1994 inherited both a high and increasing public debt/gross domestic product ratio and significant development backlogs. The government had to establish fiscal sustainability, yet also pursue development in a sustainable way. This article explores the government's performance in reconciling fiscal sustainability with sustainable development. The article shows that fiscal policy has been sustainable over the 20 years, with some risks appearing towards the end, and that the government pursued sustainable development through reallocating resources within the budget and by spending more in real terms. Three phases can be identified: 1994-2000, 2001-08 and 2009-13. However, poor service delivery and low levels of government investment during the 20 years threaten to undermine economic growth. Lower growth consequently threatens the sustainability of both fiscal policy and development, which, in turn, again undermines growth prospects. Hence, the article also identifies key future challenges.

Date: 2015
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DOI: 10.1080/0376835X.2015.1063989

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