16 April 2019

South Africa: Tax, Debt & Interest Rates - What the Manifestos Reveal About the Parties' Economic Policies (Part Three)


Unpacking the economic policies in the election manifestos of the ANC, DA and EFF, what do they say about taxes, government spending and debt, and interest rates? And should we be looking at New Zealand's model lest we have to call on the IMF for help.

Economists would want to see if the manifestos point to any change in the way the government handles the national budget and the Reserve Bank. Here the solemn words "macroeconomic policy" signal serious economic and political issues, and debates about what exactly the august institutions of the Treasury and the bank should do.

For convenience, the macroeconomic policy can be divided into fiscal policy and monetary policy. Fiscal policy is the preserve of the Treasury and involves tax, government spending and debt. Monetary policy focuses mainly on interest rates and money supply to control inflation and support economic growth.

On this aspect of economic policy as a whole, the ANC is strangely laconic: "Our macroeconomic framework, including fiscal and monetary policies, will be aligned to support the commitments made in this Manifesto."

While the EFF undertakes to nationalise the...

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