SHOULD SOUTH AFRICA ADOPT NUMERICAL FISCAL RULES?1

Abstract

large in the theory and practice of macroeconomic policymaking. South Africa has recently adopted two institutional innovations in monetary policy, namely inflation targeting and constitutional protection of the independence of the central bank. The South Africa fiscal authorities have implemented multi-year expenditure planning, but numerical fiscal rules do not seem to be on the agenda yet. However, the growing popularity of such rules in other countries suggests that they will eventually come under consideration in South Africa as well. The purpose of this article is to stimulate debate on the potential of numerical fiscal rules at the national-government level in South Africa.