IMF Letter: DA has a proactive debt ceiling proposal ready to go

Following the International Monetary Fund’s (IMF) warning that South Africa should have ‘specific (structural) reform commitments’ by October’s Medium Term Budget Policy Statement (MTBPS), the Democratic Alliance (DA) will closely monitor the commitments made by Finance Minister Tito Mboweni in his Letter of Intent (LOI) to the IMF. 

On one crucial commitment in the Letter, the DA has already tabled a Bill before parliament that is “ready to go”. The DA’s Fiscal Responsibility Bill introduces a legal debt ceiling for the first time in South Africa. We look forward to the Minister’s support for our Bill. 

Our Bill places a cap on how much new borrowing the government can do each year, and requires the permission of Parliament to exceed that cap. A fuller explanation can be found here

In his LOI Minister Mboweni committed South Africa to: 

  • reversing the upward trajectory of the public debt-to GDP ratio by considering introducing a debt ceiling; 
  • reduction of the public wage bill; 
  • rationalisation of support to SOEs; and
  • implementation of economic structural reforms

The IMF’s warning on the urgent need for structural reform gives Minister Mboweni a date with destiny in his October MTBPS in which he has to make firm commitments to remove impediments to growth and fiscal sustainability. 

Turning South Africa’s economy around is a national effort which requires a non-partisan approach from the Treasury under Mboweni. The DA has made a series of proactive economic proposals to help ignite our economy, which proposals should now be seriously considered for implementation.

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