We note Standard & Poors decision to affirm their 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” for South Africa.
However, Standard & Poors warns that our “fiscal position is weak” and that national debt, measured as net loan debt, is expected to remain above 50% of GDP in South Africa.
Which is why we believe serious consideration should be given to introducing a statutory “fiscal rule” aimed at stabilizing national debt and debt service costs in South Africa.
That is why we plan to introduce a Fiscal Responsibility Bill which provides 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 must 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 in South Africa.
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.