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SA fiscal woes and default risk: A global perspective
After an unsustainable decade-long rise, the stock of SA public debt relative to GDP has more than doubled, with a further stark deterioration inevitable during 2020/21 (see graph below). To prevent a looming fiscal crisis, the National Treasury has proposed an ambitious fiscal consolidation strategy. This Research Note briefly reflects on how SA got itself into the fiscal mess and unpacks the international literature on the ‘how’ of consolidation to identify the features of successful debt stabilisation programmes. Treasury’s proposed consolidation strategy is judged against this blueprint.
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