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SA's fiscal cliff remains a clear and present danger - experts

Dr Fanie Joubert said the Fiscal Cliff Study Group had been tracking the figures since 2007 when the civil service wage bill, social grant payments, and interest on government debt amounted to about 55% of state revenue.

Picture: 123rf

CAPE TOWN - A lower than expected shortfall in revenue has pulled South Africa back from the brink, but the fiscal cliff remains a clear and present danger.

That’s the view of the Fiscal Cliff Study Group, which defines the fiscal cliff as the point where public servants’ wages, social grant payments, and debt-service costs absorb 100% of the government’s revenue.

The group briefed a joint sitting of Parliament’s Finance Committees on Wednesday.

Dr Fanie Joubert said the Fiscal Cliff Study Group had been tracking the figures since 2007 when the civil service wage bill, social grant payments, and interest on government debt amounted to about 55% of state revenue.

“That percentage increased to 75% in last year’s budget. Then with the shock during 2020 it was more than 100% of revenue in the medium-term figures, but now with the latest figures, it has come down slightly to about 91% of tax revenue.”

ALSO READ: Mboweni on taxes: we'll have the largest shortfall ever, but we have a plan

Joubert said the budgeted figures needed to hold, or the trend would continue in the wrong direction.

The group flagged the ailing road accident fund, which it said, after Eskom, represented the single largest contingent liability for the state.

“We are very worried that we still have no finality over its funding model. From the Budget documents we can see some of this has been coming for almost two decades now,” said Joubert.

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