19 June 2019

South Africa: So, Speaking of Economics, What Happened to That R1.5-Trillion?

analysis

If there is one question on the subject of the economy President Cyril Ramaphosa should answer during his State of the Nation Address it should be this: Why did pumping R1.5-trillion into the economy over the past decade have no effect?

Cast your mind back briefly to the heady days of 2009. What salad days they were. At that point, things were flying, but danger loomed. The SA economy was just about to be caught up in what was to become the great global recession.

But as it happens, the extent to which it would affect SA economically was at that point not really clear. In the longer span, SA had just had a decade of above-average growth. Confidence was high. The government's coffers were overflowing, so much so that an incredible thing happened. One year, the government actually spent less than it took in. Crazy!

The national debt was coming down -- and gradually, the surplus gained by having to pay off less debt was being spent on expanding social services. The African National Congress had astounded the world by being a prudent, careful government financially speaking, despite fiery leftist rhetoric at every public occasion.

What happened then was...

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