With South Africa’s debt now officially at 73.9% of GDP, Treasury exploring the proposal of a binding fiscal anchor is a welcome sign of intervention. But not all fiscal rules are created equal, says Marie Antelme.
Mounting debt levels are often a sign of looming trouble.
Invariably, escalating debt increases economic fragility as the burden of repayment crowds out investment, hindering growth and limiting potential. High levels of debt also inhibit governments’ ability to allocate funds where they are most needed or respond effectively to unexpected economic shocks.