A commonly used measure of a country’s fiscal stance is the cyclically adjusted primary balance, which adjusts the fiscal balance for the economic cycle. The IMF measure for South Africa has remained in negative territory since 2009, implying that fiscal policy has stayed ‘loose’ even as the economy began to recover after the global financial crisis (GFC) and the output gap gradually closed ahead of the COVID-19 crisis. This contrasts to the implied counter-cyclical stance of fiscal policy in the years preceding the GFC, when the fiscal stance was implied to be ‘tight’ and the government paid down its debt. Looking ahead, the IMF assumes fiscal policy will become less stimulative .
