The justifiable expansion in government spending that immediately followed the 2007/2008 global financial crisis has been supplanted by a decade of loose fiscal policy and subpar macroeconomic growth. Before accounting for the inevitable realisation of Eskom’s contingent liabilities to the fiscus, SA’s “lost decade” has resulted in the doubling of government debt: from 26% in the 2008/2009 fiscal year to 57% (and counting) at present.
Two key questions need to be answered to determine whether these fears are well-founded:
- Does SA fail a debt sustainability assessment?
- Is SA’s capital market access at imminent risk?
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