Selected Issues Papers

South Africa's Fiscal Framework: Challenges and Options for Reform

By Asma Khalid, Anh D. M. Nguyen

March 31, 2025

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Format: Chicago

Asma Khalid, and Anh D. M. Nguyen "South Africa's Fiscal Framework: Challenges and Options for Reform", Selected Issues Papers 2025, 024 (2025), accessed June 16, 2025, https://doi.org/10.5089/9798229006088.018

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Summary

South Africa’s public debt has tripled since the global financial crisis and is not expected to stabilize over the medium term under staff’s baseline. Cross-country evidence suggests that fiscal rules anchored in debt ceilings can be helpful in supporting fiscal adjustments aimed at reducing public debt and bolstering policy credibility. Design features such as institutional coverage, statutory base, correction mechanisms, and flexibility provisions can make the rules more credible and durable, and formal enforcement mechanism and independent institutions can strengthen their compliance. Strengthening South Africa’s fiscal framework by introducing a debt anchor and a credible operational fiscal rule in line with international best practice could help support the authorities’ fiscal objectives and safeguard debt sustainability.

Subject: Asset and liability management, Debt limits, Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Public debt

Keywords: Africa, Debt anchor, Debt limits, Debt rule, Expenditure ceiling, Expenditure rule, Fiscal Anchors, Fiscal Councils, Fiscal Credibility, Fiscal policy, Fiscal rules, Fiscal stance, Policy credibility, Public Debt Sustainability, South Africa's public debt

Publication Details

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