Fiscal sustainability in South Africa: Will history repeat itself?
Stellenbosch Working Paper Series No. WP07/2013Publication date: 2013
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
[protected email address] (Department of Economics, University of Stellenbosch)
Several empirical studies have found that fiscal policy has been sustainable in South Africa since 1960. This paper complements these studies by providing perspective on the manner in which fiscal sustainability was maintained. It discusses two episodes of significant increases and one period of substantial reduction in the public debt burden to show that periods of rising deficits and government debt in South Africa were followed by returns to sustainable levels, thereby preventing major domestic economic crises and external interventions. The paper also provides a projection of the fiscal outlook for South Africa based on a structural VAR model. The results suggest that the discretionary fiscal decisions of 2007 to 2010 might pose a serious threat to the sustainability of fiscal policy unless the authorities respond as they did in the past by checking large budget deficits and concomitant rapid increases in the public debt burden promptly.
JEL Classification:H62, H63
Keywords:fiscal policy, fiscal sustainability, South Africa
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Upcoming Seminars
Monday 21 July 202512:00-13:00
Izak Odendaal: Old Mutual Wealth Chief Investment Strategist
Topic: "Diverging fiscal policies and what it means for markets"
12:00-13:00
Dr Neil Rankin: Ceo Of Predictive Insights & Stellenbosch University
Topic: "TBC"
12:00-13:00
Prof Willem Boshoff: Stellenbosch University
Topic: "Two competing approaches in South African competition policy: merger control and anti-cartel enforcement over the past 30 years"
BER Weekly
4 Jul 2025 One Big Beautiful Bill Act passes as tariff pause deadline loomsThis week brought a flurry of data releases alongside a heavy dose of political drama, both locally and globally. Yesterday’s stronger-than-expected US jobs report was the standout global data release. Domestically, tensions persisted in the DA-ANC relationship. On the international stage, headlines were dominated by the passage of the One Big Beautiful...
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