South Africa: slower pace of fiscal consolidation

The South African Finance Ministry chose to revise up its forecasts for the fiscal deficit in 2014/15 and 2015/16 rather than unveil new tightening measures in today’s medium-term budget statement. This was perhaps to be expected, given the proximity of elections next year. But rising public debt levels mean that austerity has simply been postponed. The winner of the elections will have the stiff task of implementing the reforms needed to both boost economic growth and keep public debt at sustainable levels.