The latest monetary decision comes against a backdrop of an improved outlook for both inflation and growth. The South African National Roads Agency Limited (SANRAL) and the Gautrain Management Agency were two of five transport institutions that cut spending in 2018/19. This paper estimated the distributional impact of the main elements of general government taxation and spending in South Africa, applying fiscal incidence analysis to the 2010/11 IES (Stats SA 2012b). The chapter also considers the main challenges facing Africa’s fiscal authorities. The analysis concludes that South Africa is managing a sizeable reduction in poverty and inequality through its fiscal instruments compared to certain other countries. Fiscal Policy, Income Redistribution, and Poverty Reduction in Low- and Middle-Income Countries Abstract Using comparative fiscal incidence analysis, this paper examines the impact of fiscal policy on inequality and poverty in twenty-nine low-and middle-income countries for circa the year 2010. On the tax side, it analyzed the incidence of 64.5 percent of total tax revenue, including PIT, VAT, excise taxes on alcohol and tobacco, and the general fuel levy. The decision, which marks the first rate cut since July 2017, was expected by markets. Fiscal policy ensures macroeconomic stability as a precondition for growth at the macro level. In a country as unequal as South Africa, it is critical to determine the progressiv eness of the major fiscal policy instruments – i.e. The primary objective of fiscal policy, which is the primary objective of National Treasury, is to stabilize national debt in South Africa. The Update seeks to measure the impact of fiscal policy on inequality and poverty in South Africa compared to 12 middle-income countries. South Africa, highlighting some of the reasons why fiscal policy may not reduce inequalities in child health and nutrition. Fiscal Cliff. July 2016; ... but it has no effect on output for South Africa during the period 1994:1-2008:4. Consequently, the next objective in this study is to analyse one important element of protecting the revenue base, namely, possible leakages from it. Total expenditure by extra-budgetary accounts and funds (EBAs) involved in transport fell by 3,5%, from R32,0 billion in 2017/18 to R30,9 billion in 2018/19.1 This is according to the latest Financial statistics of read more » This Medium Term Budget Policy Statement (MTBPS) highlights the difficult economic and fiscal choices confronting government over the next several years. The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) slashed the repurchase rate from 6.75% to 6.50% at its three-day meeting that ended on 28 March. Department of Economics, University of Fort Hare, Alice (Main) Campus, Private Mail Bag, X 1314, South Africa’s fiscal policy goes a long way towards achieving income redistribution but poverty and inequality in South Africa after taxes and spending remains too high. 1. 1. Average fiscal balance in Africa by fiscal policy stance, 2015–2018..... 37 FIGURE 2.9. The effectiveness of fiscal policy is an interesting field in literature of macroeconomics. The economic outlook has improved. IDA in Africa With IDA’s help, hundreds of millions of people have escaped poverty—through the creation of jobs, access to clean water, schools, roads, nutrition, electricity, and more. Fiscal policies have provided large emergency lifelines to people and firms during the COVID-19 pandemic. to establish whether government spending and South Africa's tax-to-GDP ratio in 2017 (28.4%) was higher than the average of the 26 African countries in Revenue Statistics in Africa 2019 (17.2%) by 11.2 percentage points and … In the 2018/19 fiscal year SARS collected R 1 287.7 billion (equivalent to US$ 86.4 billion) in tax revenue, a figure R71.2 billion (or 5.8%) more than that from the previous fiscal year. the richest 20% of South Africans, compared to 55.7% in Brazil (StatsSA 2014; SEDLAC). South Africa's monetary and fiscal policy does seem a little disjointed and there is no clear evidence that our monetary and fiscal policy is coordinated. South Africa: Staff Concluding Statement of the 2018 Article IV Mission. Read more. This is in order to maintain government’s spending programmes. It judges South Africa’s countercyclical fiscal stance in response to the crisis against the major theoretical debates and empirical evidence in the literature. This study investigates the impact of fiscal policy on economic growth of South Africa from 1960 to 2014 through a Cointegrated Vector Autoregression approach. We conclude that better targeting and coordination of policies, The moderate fiscal consolidation envisaged in the 2018 budget is a step in the right direction. At its meeting on 19 November, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) decided to leave the repurchase rate unaltered at its historic low of 3.50%. Africa’s poorest countries saw little to no progress on average in improving the quality of their policy and institutional frameworks in 2018. Fiscal Policy and Economic Growth in South Africa . South Africa will host a Jobs Summit later this year to bring together business, labour and government with the objective of boosting employment. The risks of South Africa running large fiscal deficits are then evaluated with regard to both the level of public debt, and its associated interest payment burden. This chapter focuses on fiscal policy in Africa, with emphasis on fiscal developments over the longer term and during business cycles, the amount and allocation of government spending, the taxation system, and the quality of fiscal institutions. Fiscal policy measures South Africa raises tax revenue to fund most public spending. To access Fiscal Policy and Redistribution in an Unequal Society: The Case of South Africa, as a free, interactive e-book that offers details on how each grant program impacts the rate of poverty in South Africa’s provinces, click here > then click on “free,” and log-in or sign-up to find the title in your library. policy effectiveness. In South Africa, new policies, such as the minimum wage policy, which will be implemented during 2018; increases in direct and indirect ta xe s a nd the rising cost This event featured a presentation by Reverend Frank Chikane on the issues that will face South Africa over the next four years. ... Fiscal policy to rebuild policy buffers. Income inequality in Africa, by subregion, 2000–2014 ... Fiscal decentralization in South Africa ..... 88 BOX 5.1. 2. Chikane has served as Director General for every South African President since 1994 and brings a unique “insider’s” perspective and unparalleled experience with regard to governance in South Africa. When the budget is in deficit, ... R16 billion in 2018/19. Downloadable! And government has expressed a new resolve to strengthen policy coordination. Matthew Kofi Ocran. The fiscal environment in South Africa has been deteriorating over the last few years due to various factors such as, large accumulating debt burdens, policy uncertainty, weak economic growth and large social burdens like unemployment and poverty. This will be achieved through reduced national Table 1.2 Consolidated government fiscal framework 2016/17 2017/18 2018/19 2019/20 Downloadable! However, this has been a spectacular failure, with national debt, measured as net loan debt, set to balloon to a staggering R3.03 trillion, or R52.2% of GDP, in 2020/21. IMF Executive Board Concludes 2018 Article IV Consultation with South Africa On July 25, 2018, the Executive Board of the International Monetary Fund concluded the Article IV consultation with South Africa.1 Amid a marked growth deceleration, some of South Africa’s economic and social achievements after the end of apartheid have recently unwound. Another initiative to support this goal is the YES (Youth Employment Service) initiative, which was launched in March 2018 with the aim of creating one million paid internships for South African youths over the next three years. In 2018/19 financial year, South Africa had a tax-to-GDP ratio of 26.2% that was only slightly more than the 25.9% in 2017/18. South Africa finds itself at a crossroads. A coordinated monetary and fiscal policy would see the bubbles clustered together a lot more. South Africa’s fiscal policy is focused on containing the budget deficit and slowing the pace of debt accumulation. November 19, 2020. In South Africa the main fiscal challenge, therefore, is to find ways through which the recent gains in fiscal solvency are not at the expense of the future revenue base. South Africa's government revised its budget deficit forecast to 15.7 percent of GDP in 2020/21 fiscal year from an earlier estimate of 14.6 percent in June and compared to 6.4 percent in 2019. "South Africa: 2018 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for South Africa" published on by INTERNATIONAL MONETARY FUND. During 2018, South Africa has faced lower-than-expected economic … Increased investment spending would decrease the national debt of the country as a percentage of its Gross Domestic Product, reduce government deficit and improve the economic health of the country, says Margaret Chitiga-Mabugu.. A low debt-to-GDP (Gross Domestic Product) ratio indicates an economy that produces a large amount … Through its fiscal instruments compared to 12 middle-income countries National debt in South Africa government threat... ) highlights the difficult economic and fiscal choices confronting government over the next years... At the macro level on South Africa ’ s poorest countries saw to... 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