Inability of the South African economy to generate sufficient domestic savings for domestic reinvestment, as well as the tendency for the current account of the balance of pajmients to be in deficit during periods of economic growth. This is largely due to the apartheid system itself. The South African economy has been in decline for two decades, although this has been hidden by heavy foreign borrowings and occasional gold price boosts. Sanctions have only exacerbated this decline. 29. In the 1960s and 1970s, it became increasingly difficult for South Africa to meet its investment needs. Local savings declined with falling growth rates, increased unemployment and lower per capita incomes. An Increasing tax burden and inflation have meant that white consumers could maintain their living standards only by reducing their savings. In the public sector as well savings have lagged far behind investment demands. In 1977, public sector investment accounted for some 30 per cent of gross domestic expenditure of which the public authorities could only finance 22.6 per cent from their own current surpluses. Between 1956 and 1983, the share of the public sector in total foreign liabilities has grown rapidly. The growing dependence of the Government and public corporations on foreign loans has greatly increased the vulnerability of the South African economy to international pressures. 30. South Africa's large public sector reflects a policy of allocating capital based on strategic importance to the survival of the apartheid system, rather than social or economic factors and this entails enormous waste. The armed services account for 20 per cent of the Government's annual budget and 5 per cent of GNP. Military and police spending was increased by 22 per cent in 1988 and by 25 per cent in 1989 to R14.9 billion. Altogether, public 
**Analysis**
The text primarily discusses the economic challenges faced by South Africa, specifically the inability of the economy to generate sufficient domestic savings, the current account deficit, and the growing dependence on foreign loans. The text also touches on the impact of the apartheid system on the economy, including the allocation of capital based on strategic importance rather than social or economic factors. Given the focus on economic issues, it is likely that the text belongs to the category of economic development.

**Category**
Economic development