IEJ Webinar Series | 12 February 2025
The National Treasury has presented the proposal for a binding fiscal rule as one of the potential solutions to chart South Africa’s debt on a sustainable path. International evidence, however, suggests that it is not a panacea for addressing public debt concerns. It has political and social implications that may hinder its efficacy in the long run.
The ANC’s Economic Transformation Committee has rejected a potential fiscal rule and pointed to the rigidity it imposes on fiscal policy. At the same time, the Minister of Finance cast doubt over its effectiveness/suitability. As the National Treasury prepares to hold stakeholder engagements on the proposal and publish its discussion document in March 2025, the IEJ invited key experts to share their insights on the proposal for a fiscal rule, and whether it can arrest South Africa’s debt concerns, along with potential alternatives.
This engagement kickstarted the IEJ’s webinar series for 2025. The series will cover a range of topics, including social security, food systems, energy, the just transition, climate finance, and other issues related to the IEJ’s work.
Facilitator: Joan Stott
Presenters: Liso Mdutyana and Zimbali Mncube
Panelists: Michael Sachs, Krige Siebrits, and Seeraj Mohammed
Addressing South Africa’s debt: Why a new fiscal rule is not the answer
The IEJ’s team began the webinar by presenting findings from their discussion paper. The presenters argued that South Africa’s debt-to-GDP ratio is not the main challenge to budget sustainability. Rather it is the high interest payments South Africa is paying on debt. The IEJ’s findings show that a fiscal rule limits the flexibility of fiscal policy in responding to external shocks, it leads to a non-transparent budget process to adhere to the numerical limits and may worsen budget cuts. They instead called for more direct ways to tackle debt concerns such as reducing the cost of debt and using fiscal policy to maximise growth. Liso Mdutyana cautioned that “fiscal rules cannot be a substitute for budgeting based on negotiation and consensus building with stakeholders” and that “If the National Treasury wants to achieve a more sustainable fiscal path it needs to build political convergence behind such.”
Should we be concerned about fiscal sustainability?
Michael Sachs emphasised that fiscal sustainability is a problem that we should be concerned about, in general, in the abstract, and the concrete given South Africa’s current conditions.
A key question he posed was, “What is the political basis of fiscal sustainability?” He echoed sentiments by Blanchard, arguing that we should be speaking about fiscal standards rather than fiscal rules. These standards should be adjudicated by independent institutions and entail a move away from quantitative numerical limits to qualitative fiscal standards. In other words “a move away from the pure public finance view of debt sustainability” which the National Treasury is still using according to Michael Sachs. It is no longer viable to delegate fiscal sustainability to the National Treasury, there is a need for a shift to a negotiated social compact type of discussion on fiscal policy.
A move towards fiscal standards?
Krige Seibrits’ presentation echoed some of the concerns highlighted by the IEJ discussion paper, noting that the adoption of fiscal rules is regularly breached, is complex, comes with political risks, and should not be overestimated to address fiscal problems. The latter is clear in the debt break debate in Germany. He highlighted that the German debt brake “once known as a key example to emulate ironically has now caused tensions regarding its constitutionality in the traffic light-coalition in Germany.”
In agreement with Michael Sachs, Krige Seibrits called for a move towards fiscal standards as opposed to attaching a numerical limit to fiscal sustainability. He argued that it should be considered as part of the extension of our current fiscal sustainability regime. The scope of the fiscal standards and who sets them is something that should be discussed further.
Closure and way forward
The webinar highlighted the shortcomings of fiscal rules and their impact on fiscal policy. Speakers reflected on the need to use fiscal policy to maximise growth, address South Africa’s structural unemployment, and take measures to reduce the cost of borrowing. Rather than a fiscal rule, the discussion noted that other countries have tended to adopt fiscal standards, and this opens up fiscal policy to more deliberation and engagement with a wide range of stakeholders.
Going forward, the IEJ will continue to engage relevant political parties and the National Treasury on the proposal for a new fiscal rule and its implications for fiscal policy in the long run.
Amaarah is a Junior Programme Officer in the Rethinking Economics for Africa project. She is currently studying towards her Masters in Applied Development Economics at Wits University. 
Dr James Musonda is the Senior Researcher on the Just Energy Transition at the IEJ. He is also the Principal Investigator for the Just Energy Transition: Localisation, Decent Work, SMMEs, and Sustainable Livelihoods project, covering South Africa, Ghana, and Kenya.
Dr Basani Baloyi is a Co-Programme Director at the IEJ. She is a feminist, development economist and activist. She gained her research experience while working on industrial policy issues in academia, at the Centre For Competition, Regulation and Economic Development (CCRED) and Corporate Strategy and Industrial Development (CSID) Unit.
Dr Andrew Bennie is Senior Researcher in Climate Policy and Food Systems at the IEJ. He has extensive background in academic and civil society research, organising, and activism. Andrew has an MA in Development and Environmental Sociology, and a PhD in Sociology on food politics, the agrarian question, and collective action in South Africa, both from the University of the Witwatersrand.
Juhi holds a Bachelor of Arts degree in International Relations and Sociology from Wits University and an Honours degree in Development Studies from the University of Cape Town. Her current research focus is on social care regimes in the South African context, with a particular focus on state responses to Early Childhood Development and Long-Term Care for older persons during the COVID-19 pandemic. Her other research areas include feminist economics, worlds of work and the care economy.
Bandile Ngidi is the Programme Officer for Rethinking Economics for Africa. Bandile has previously worked at the National Minimum Wage Research Initiative and Oxfam South Africa. He holds a Masters in Development Theory and Policy from Wits University. He joined the IEJ in August 2018. Bandile is currently working on incubating the Rethinking Economics for Africa movement (working with students, academics and broader civil society). 
Liso Mdutyana has a BCom in Philosophy and Economics, an Honours in Applied Development Economics, and a Masters in Applied Development Economics from Wits University. His areas of interest include political economy, labour markets, technology and work, and industrial policy. Through his work Liso aims to show the possibility and necessity of economic development that prioritises human wellbeing for everyone.
Joan Stott holds a Bachelor of Business Science in Economics and a Master’s in Economics from Rhodes University. She brings to the IEJ a wealth of experience in public finance management, policy development, institutional capacity-building, and advancing socioeconomic and fiscal justice.
Siyanda Baduza is a Junior Basic Income Researcher at IEJ. He holds a BSc in Economics and Mathematics, an Honours degree in Applied Development Economics, and is currently completing a Master’s degree in Applied Development Economics at the University of the Witwatersrand. Siyanda’s research focuses on the impacts of social grants on wellbeing, with a particular focus on the gendered dynamics of this impact. His interests include applied micro-economics, policy impact evaluation, labour markets, gender economics, and political economy. He is passionate about translating economic research into impactful policy.
Shikwane is a Junior Programme Officer at IEJ focusing on civil society support and global governance in the G20. He has a background in legal compliance, IT contracting and student activism. He holds degrees in Political Studies and International Relations, as well as an LLB, from the University of the Witwatersrand.
Dr Tsega is a Senior Researcher focusing on Women’s Economic Empowerment within the G20. She examines gender equity in economic policy, with expertise in food systems and small enterprise development. She holds a PhD in development studies from the University of the Western Cape, an MA in Development Economics, and degrees in Development Studies and Economics from UNISA and Addis Ababa University.
Nerissa is a G20 Junior Researcher at IEJ, focusing on advancing civil society priorities within the G20 framework. She bridges data, research, and policy to advance inclusive economic frameworks. She is completing a Master’s in Data Science (e-Science) at the University of the Witwatersrand, and holds Honours and Bachelor’s Degrees in International Relations with distinction. She has worked as a Research Fellow at SAIIA and a Visiting Research Fellow at Ipea in Brazil.
Dr Mzwanele is a Senior Researcher supporting South Africa’s G20 Sherpa with policy research. He holds a PhD in Economics from the University of Birmingham and an MSc from the University of the Witwatersrand. His work covers open macroeconomics, trade, finance, and higher education policy, and he has published widely on inequality, unemployment, household debt and higher education curriculum reform.
Kamal is the Project Lead for IEJ’s G20 work, focusing on sovereign debt and development finance. He holds a BComm (Hons) in Applied Development Economics from the University of the Witwatersrand and an Erasmus Mundus Joint Masters in Economic Policies for the Global Transition. He has worked with SCIS, UNCTAD and co-founded Rethinking Economics for Africa.