South Africa has a comparably large government sector, and the choices made about revenue, expenditure, the deficit and how money is spent will play a defining role in shaping how incomes and employment will grow. These fiscal-macro issues collide with micro-level issues such as implementation capacity, failing economic regulation, corruption, high costs of economic activity, and 13 years of load-shedding. All of this gets “baked” in a deeply political environment, where “winners” and “losers” trade behind often closed doors; and costs and benefits are often differently and opaquely defined. Key questions that will shape the session discussion include:
- Is it a demand problem or a supply problem? Does it matter?
- Why have large deficits and rising spending (real and as percent of GDP) not generated economic growth?
- How should we balance consolidation against stimulus?
- With so many opportunities for positive reform and so many decent contributions to what needs to be done, why is nothing happening?
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