{"id":472912,"date":"2021-03-04T10:39:33","date_gmt":"2021-03-04T08:39:33","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=472912"},"modified":"2021-03-04T10:39:33","modified_gmt":"2021-03-04T08:39:33","slug":"south-africa-has-pulled-itself-back-from-a-fiscal-cliff-but-there-are-warnings-it-could-teeter-again","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/472912\/south-africa-has-pulled-itself-back-from-a-fiscal-cliff-but-there-are-warnings-it-could-teeter-again\/","title":{"rendered":"South Africa has pulled itself back from a fiscal cliff – but there are warnings it could teeter again"},"content":{"rendered":"

Better than expected revenue collection means that South Africa has managed to pull itself back from the fiscal cliff in its latest budget, but the warning signs are still there.<\/p>\n

This is according to the Fiscal Cliff Study Group (FCSG) which presented its response to the 2021 national budget in parliament this week.<\/p>\n

The fiscal cliff is the point where civil service remuneration, social assistance payments and debt-service costs will absorb all government revenue.<\/p>\n

The group said that these three costs took up 55% of\u00a0 all tax revenue in 2007\/08. This increased to 75.5% of tax revenue in terms of the February 2020 budget.<\/p>\n

The FCSG said that this neared 100% of estimated tax revenue in the October 2020 MTBPS, but that has clawed back 91% of tax revenue in terms of the February 2021 budget due to a lower than expected shortfall in revenue.<\/p>\n

\"\"<\/a><\/p>\n

“The fiscal cliff barometer improved compared to the 2020 MTBPS, but continued vigilance is necessary as the shift is caused by significantly smaller than expected revenue under-recovery,” the FCSG said.<\/p>\n

It added that the longer-term outlook for the fiscal cliff barometer remains worrying as it is likely to trend in the wrong (upwards) direction.<\/p>\n

To reverse these trends, the study group said that Treasury needs to refrain from helping non-essential failed state-owned enterprises such as Alexkor, Denel, SA Express, and South African Airways.<\/p>\n

It added that future austerity budgets are inevitable, as South Africa has not had any austerity budgets over the past decade.<\/p>\n

The FCSG said that it also remains skeptical about some of the government’s medium-term forecasts.<\/p>\n

“We urge members to take note of the (finance) minister’s repeated warnings about a looming sovereign debt crisis. Global lenders\u2019 willingness to provide funds should not be confused with South Africa\u2019s ability to repay it.<\/p>\n

“The only real long term solution is sustainable economic growth – which will provide impetus for revenue to rise.”<\/p>\n

\n

Read: 1.6 million people are paying most of South Africa\u2019s income tax<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Better than expected revenue collection means that South Africa has managed to pull itself back from the fiscal cliff in its latest budget, but the warning signs are still there.<\/p>\n","protected":false},"author":10,"featured_media":437433,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26],"class_list":["post-472912","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/472912","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=472912"}],"version-history":[{"count":9,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/472912\/revisions"}],"predecessor-version":[{"id":472988,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/472912\/revisions\/472988"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/437433"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=472912"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=472912"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=472912"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}