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Fiscal sustainability in South Africa: Will history repeat itself?

Author

Listed:
  • Estian Calitz

    () (Department of Economics, University of Stellenbosch)

  • Stan du Plessis

    () (Department of Economics, University of Stellenbosch)

  • Krige Siebrits

    () (Department of Economics, University of Stellenbosch)

Abstract

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.

Suggested Citation

  • Estian Calitz & Stan du Plessis & Krige Siebrits, 2013. "Fiscal sustainability in South Africa: Will history repeat itself?," Working Papers 07/2013, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers183
    as

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    File URL: https://www.ekon.sun.ac.za/wpapers/2013/wp072013/wp-07-2013.pdf
    File Function: First version, 2013
    Download Restriction: no

    References listed on IDEAS

    as
    1. Black, Philip & Calitz, Estian & Steenkamp, Tjaart, 2015. "Public Economics," OUP Catalogue, Oxford University Press, edition 6, number 9780199059089.
    2. Gauthier Tshiswaka-Kashalala, 2006. "Is Fiscal Policy Sustainable in South Africa? An Application of the Econometric Approach," Working Papers 200614, University of Pretoria, Department of Economics.
    3. Stan du Plessis & Willem Boshoff, 2007. "A fiscal rule to produce counter-cyclical fiscal policy in South Africa," Working Papers 13/2007, Stellenbosch University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    fiscal policy; fiscal sustainability; South Africa;

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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