SOUTH AFRICA IS TEETERING ON THE EDGE OF A FISCAL CLIFF…

south Africa’s deteriorating finances have brought it to the brink of what economists describe as a fiscal cliff – the point at which a country is unable to borrow enough to cover its spending requirements and service its debt, either because it can’t find lenders or because credit has become unaffordable.

Plunging over the edge looks increasingly likely, as SA’s plans to stabilise borrowing over the next three years depend almost entirely on freezing the bloated public sector wage bill, which will absorb half of the country’s tax revenues this year.

So far there is no indication that labour unions, which were not consulted, will agree to the strategy outlined in October’s medium-term budget and break with their long-standing history of demanding wage increases well above inflation.

Treasury’s plans to narrow budget deficits and put debt