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

Selected Issues Papers, March 31, 2025

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

Publication title: South Africa's Fiscal Framework: Challenges and Options for Reform
Authors: Asma Khalid, Anh D. M. Nguyen
Date: March 31, 2025
Series: Selected Issues Paper No. 2025/024
Pages: 24
DOI: https://doi.org/10.5089/9798229006088.018
ISBN: 9798229006088
ISSN: 2958-7875
Stock No: SIPEA2025024

South Africa’s public debt has tripled since the global financial crisis.
Under staff’s baseline, public debt is not expected to stabilize over the medium term.
Cross-country evidence suggests fiscal rules anchored in debt ceilings can help support fiscal adjustments aimed at reducing public debt and bolstering policy credibility.
Design features that improve credibility and durability of fiscal rules include:
- institutional coverage
- statutory base
- correction mechanisms
- flexibility provisions
Formal enforcement mechanisms and independent institutions can strengthen compliance with fiscal rules.

Strengthen South Africa’s fiscal framework by:
- Introducing a debt anchor.
- Introducing a credible operational fiscal rule in line with international best practice.
Expected objectives of reforms:
- Help support the authorities’ fiscal objectives.
- 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

Source: South Africa's Fiscal Framework: Challenges and Options for Reform, Selected Issues Papers, March 31, 2025.