The Parliamentary Budget Office has warned against exaggeration when referring to the country’s economic prospects.
The office has projected a low revenue collection, with a R39 billion shortfall.
Coupled with that is low economic growth and less funds being available for expenditure priorities.
However, Deputy Director at the Office, Seeraj Mohamed, has refuted suggestions that the country’s debt is spiralling out of control and have no basis.
“The statement that South Africa is heading towards a fiscal cliff have no basis.”
Finance Minister Pravin Gordhan is set to present his medium term budget next week in Parliament, where he could release another round of spending cuts.
While the economy has grown 3.3% in the second quarter after shrinking by 1.2% in the first, analysts warned that overall growth would remain subdued.
This is partly due to the volatile political situation and low commodity prices.
The central bank forecasts economic growth of 0.4% in 2016, while Treasury has said it will revise its own growth forecast downwards at next week’s mid-term budget.
“We should be careful not to talk about debt spiralling out of control just because there are different levels and different countries are affected differently by that. I think there is no empirical or support in the literature to think that SA’s debt will soon be spiralling out of control.”
On Wednesday, Gordhan said South Africa was making progress towards avoiding rating downgrades despite the economy not growing fast enough.
– Additional reporting by Reuters
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