Briefing Note: Responding to the slowdown - Graph 1. The budget deficit as a percentage of the GDP 2%

Briefing Note: Responding to the slowdown The figures for general government consumption and for public investment point to the pro-cyclical impact of the current fiscal policy, combined with consolidation at the state-owned corporations over the past year. [...] The failures around tax collection meant that the deficit climbed from just under 4% of the GDP in 2016/7 to 4.5% in 2017/8, largely due to a drop in VAT revenue. [...] While the deficit is still on the high side, public debt stock in South Africa as a percentage of GDP is essentially at the norm for upper-middle-income economies. [...] The noise around the decline in the GDP over the first half of 2018, which is mainly driven by unexplained fluctuations in agricultural output as well as declining state spending, should not distract from the fact that overall performance has been poor over the past five years. [...] That in turn requires a careful balancing between maintaining the rule of law and bringing about visible improvements in the lives of the majority.