Johannesburg – The Financial and Fiscal Commission (FFC) on Tuesday said the government should consider relaxing its fiscal consolidation stance to deal with the economic fallout from the coronavirus pandemic.
So far Finance Minister Tito Mboweni has held the line on fiscal consolidation – a policy aimed at reducing the budget deficit and government’s soaring debt service costs.
During a briefing with Parliament’s Standing Committee on Appropriations on Tuesday, the FFC made it clear the R500 billion Covid-19 fiscal support package announced by the government did not go far enough and that bolder measures would be needed.
“We’ve noted that in Budget 2020, there was no fiscal space – and that the debt –servicing costs were extremely high- but we’re still of the opinion that government should reconsider its fiscal consolidation stance and relax it,” FFC’s Dr. Kay Brown said.
“We are not sure necessarily whether this gap-filling measure is going to take us to the stimulus that we would want – we’re not sure, we think that it is mostly aggregate-demand neutral and that we do need to look at serious bigger reforms within government,” added Brown.
