The FF Plus’s economic policy framework is in line with the opinion expressed by the IMF regarding the ANC government, which asserts that state debt must have a debt ceiling. Die debt ceiling must be determined by the state’s capital assets and the state’s debt may never exceed these capital assets.
It will prevent dissaving (making loans without security) from occurring, seeing as all debt will be backed up by assets that can serve as collateral when the debt cannot be repaid. It would also mean that taxpayers will not have to cover state debt.
Given the country’s current economic position and the government’s exaggerated projections for future economic growth, on which fiscal debt is based, it is clear that the government is making too much debt and will not be able to meet all its financial obligations.
A debt ceiling that can be amended by Parliament will afford the legislative authority greater oversight of the executive authority’s fiscal policy. It will place a renewed public focus on reckless government expenditure as well as their overly optimistic projections of economic growth.
It will enable Parliament to more effectively debate the relevant issues and the media and citizenry will be able to put more pressure on the government to act responsibly.
Last year just before the adjustment budget, the FF Plus released a fiscal policy aimed at addressing the government’s debt problems. The policy requires that state debt must be controlled by a Fiscal Commission (FC) that functions like the Reserve Bank.
As the Reserve Bank oversees monetary policy, the FC must oversee fiscal policy by means of adjustments in VAT. If there is a budget deficit, VAT must be increased until the balance between income and expenditure has been restored. As soon as this balance has been achieved and the budget is under control, VAT can be decreased again.
The time has come for the ANC government to heed the IMF’s warnings and recommendations so that the country’s economy can be pulled back before it plunges off a fiscal cliff.
Read the original article by Adv Anton Alberts in Afrikaans on FF Plus
South Africa Today – South Africa News
