FF Plus agrees with the IMF as regards to a debt ceiling for government
27 June 2018
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 tax payers 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.