South Africa’s government is running out of money – IRR

(Click here to read "The scary, sensational and surprising future of South Africa" in which Frans Cronje of the SA Institute of Race Relations discusses what South Africa might look like in 2024.)

South Africa is heading for a fiscal cliff, according to SA Institute of Race Relations (IRR) CEO Frans Cronjé.

In layman’s terms; we’re running out of money.

Revenue is down; expenditure is rising

“Ten years ago government revenue as a percentage of GDP sat around 23 percent,” says Cronjé. “It’s now well past 28 percent and, by next year, I expect it at just below 30 percent.”

A decade ago government expenditure as a percentage of GDP was around 23 percent, leading to a deficit of around two to three percent. “That number is now projected to hit around 34 percent which could see the deficit surpass five percent.

“These numbers are unsustainable for South Africa,” warns Cronjé.

3 ways to step back from the brink

There are, according to Cronjé, three ways for South Africa to get out of this mess:

1. Spend less

This option is, politically, very tough to implement. About 60 percent of the national budget goes to social spending and cutting this might be political suicide.

2. Borrow more

When Nelson Mandela became president South Africa’s government debt-to-GDP was around 50 percent. A decade after that it had improved to 27 percent and remained that low until the global financial crisis brought it back to around 50 percent.

If government continues borrowing at this rate it’ll take less than four or five years before it becomes unable to repay.

3. Faster economic growth

If we achieve rapid economic growth revenues will increase which will cut the deficit.

South Africa’s acute electricity shortage, however, means South Africa is unable to grow itself out of trouble.

“Treasury understands the severity of the problem,” reckons Cronjé. “It’s the rest of Cabinet I’m worried about.

“This fiscal cliff will be the definitive force shaping economic policy in South Africa in the next two or three years.”

Listen to the audio for more detail.

(Click here to read "The scary, sensational and surprising future of South Africa" in which Frans Cronje of the SA Institute of Race Relations discusses what South Africa might look like in 2024.)

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Bloomberg makes fishy discovery when visiting Charles King (new owner of Tegeta)

Bloomberg makes fishy discovery when visiting Charles King (new owner of Tegeta)

Why is its registered address that of a violin shop? Bruce Whitfield interviews Intellidex’s Stuart Theobald.

5 reasons your expenses feel so much more (than the 4.6% inflation rate)

5 reasons your expenses feel so much more (than the 4.6% inflation rate)

The Money Show’s Bruce Whitfield interviews Econometrix Treasury Management Director George Glynos.

Meet Jonathan Ball, founder of South Africa’s leading publisher of English books

Meet Jonathan Ball, founder of South Africa’s leading publisher of English books

The Money Show’s Bruce Whitfield interviews Ball, who created Jonathan Ball Publishers 41 years ago.

This sport requires you to run, drive and fight all while remaining seated

This sport requires you to run, drive and fight all while remaining seated

eSports are more than just a game now and may even be an Olympic sport by 2024.

I want to ride my bicycle! I want to ride my bike!

I want to ride my bicycle! I want to ride my bike!

The business of cycling... The Money Show’s Bruce Whitfield interviews Team Dimension Data’s Doug Ryder.

The scary, sensational and surprising future of South Africa

The scary, sensational and surprising future of South Africa

Frans Cronje of the SA Institute of Race Relations discusses what South Africa might look like in 2024. Imagine the unimaginable…

Popular articles
So what exactly is radical economic transformation?

So what exactly is radical economic transformation?

Wits associate professor of economics Christopher Malikane speaks to Azania Mosaka about the term that is being bandied about.

Getting to know MP, Dr Makhosi Khoza

Getting to know MP, Dr Makhosi Khoza

Dr Khoza is admired by South Africans for her role in the SABC inquiry as a ANC member of parliament.

10 sexting tips on how to keep things spicy (and safe)

10 sexting tips on how to keep things spicy (and safe)

Interested in sexting but worried about the risks? Dr Eve has created a guideline to help you 'sext' in a fun and responsible way.

It's not the end of the road... Top tips to improve your matric

It's not the end of the road... Top tips to improve your matric

"Recognise that it’s not the end, it’s the beginning." Expert advise for school-leavers who want to improve their results.

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

Blesserfinder: Matching you with a sugar daddy near you

Blesserfinder: Matching you with a sugar daddy near you

Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?