It is tempting to blame the predicament in which South Africa finds itself on the muted global economic recovery in the wake of the 2007-08 financial crisis given that the deterioration in government finances started in 2009. However, it is not that easy - the South African economy is after all losing momentum while the global economy (and emerging market economies in particular) is gaining momentum.
To assess the deterioration one needs to look at the trends in a number of variables: government revenue/tax collections, government expenditure (including its composition), and the size and growth of GDP ( the denominator in many important financial ratios).
National government revenue amounted to 25,4% of GDP in the 2008/09 fiscal year. It dropped to 22,9% the following year in response to the recession the economy had entered in the wake of the international economic turmoil, but started recovering almost immediately and was back at 25,8% of GDP in 2016/17 (helped along by tax increases). Surely the blame therefore does not lie here, although the recent weakening trend in tax collection points to more trouble lying ahead.
Government expenditure amounted to 25% of GDP in 2007/08 and the ratio automatically started rising at the time of the international crisis, partly in response to lower-than-expected GDP numbers because of the recession, and partly because of “counter-cyclical” government expenditure. (Increasing the government wage bill does not qualify as counter-cyclical expenditure in the same sense as e.g. accelerating infrastructure expenditure.) Government expenditure peaked at 30,2% of GDP in 2015/16 and amounted to 29,7% in 2016/17.
If expenditure had remained at 25% of GDP, cumulative total expenditure as a percentage of GDP over the period 2008/09 to 2016/17 would have been approximately 30 basis points less and the gross national government debt level would likewise have been lower. Keeping the debt level at 26% of GDP as in 2009 would have allowed for moderately higher expenditure; allowing it to increase within limits (to not more than, say, 40% of GDP rather than the current 51%) would have allowed more room for increasing targeted expenditure without upsetting South Africa’s credit rating dynamics.
The problem is therefore clearly on the expenditure side, and then not only with respect to its magnitude but also its composition and quality. The disproportionate increase in government’s wage bill, including a bloated cabinet, since the change to the Zuma administration in 2009 has been well documented (and justifiably criticised).