SAICA and fiscal body challenge Treasury’s proposed fiscal anchor model

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While the introduction of a fiscal anchor to control spending and debt has mostly been welcomed, organisations have made alternative suggestions to Parliament on how it should function.

On Wednesday, the South African Institute of Chartered Accountants (SAICA) said it would be more in favour of a numerical target rather than a principled one.

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Meanwhile, the Pan-African Institute for Fiscal and Policy Studies said Parliament should take the lead on assessing the fiscal anchor, rather than the Financial and Fiscal Commission (FFC) as currently suggested by the Treasury.

Last week, Finance Minister Enoch Godongwana announced the long-awaited introduction of a fiscal anchor that will be legislated when he tabled the Medium-Term Budget Policy Statement (MTBPS).

During public hearings on the budget policy statement, SAICA’s Lesedi Seforo said that while the organization supported the principle of a fiscal anchor, it disagreed with how it would function.

“It needs to be a fixed target, just like with inflation targeting. It gives government something to work towards,” Seforo said.

While draft legislation envisions the FFC playing an oversight and advisory role in government’s fiscal plan, the Pan-African Institute for Fiscal and Policy Studies says this responsibility should fall to Parliament, including demanding amendments when necessary.

The institute’s Dumisani Jantjies is the former head of Parliament’s Budget Office.

“Parliament must be able to require a revised plan, not just receive explanations, which raises the question: who must assess this? In our view, the anchor answers to Parliament, so Parliament’s own budget office should assess it,” Jantjies said.

Jantjies said the FFC’s role should remain one of intergovernmental oversight.

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