Cape Town - Serious consideration should be given to introducing a statutory “fiscal rule” aimed at stabilising national debt and debt service costs in South Africa, the Democratic Alliance said on Saturday.
The DA noted ratings agency S&P Global's decision to affirm South Africa's sovereign credit rating with a long-term foreign currency rating of “BB” and a long-term local currency rating of “BB+” with a “stable outlook”, DA spokesman David Maynier said.
However, S&P warned that the “fiscal position is weak” and national debt, measured as net loan debt, was expected to remain above 50 percent of GDP.
"Which is why we believe serious consideration should be given to introducing a statutory 'fiscal rule' aimed at stabilising national debt and debt service costs in South Africa," he said.
Thus, the DA intended to introduce a draft Fiscal Responsibility Bill in parliament, which would provide for a statutory fiscal rule prescribing that for each financial year from 2019/20 to 2022/23 net loan debt expressed as a percentage of GDP should not be more than it was the previous year; and a review of the fiscal rule by the National Assembly every four years, beginning in 2023/24 by either amending, renewing, or terminating the fiscal rule.
"We believe that if the Fiscal Responsibility Bill were to be enacted it would go a long way to restoring the 'investment grade' sovereign credit rating of South Africa," Maynier said.
African News Agency/ANA