The Centre for Policy Alternatives (CPA) and its Executive Director challenged the provisions of the Fiscal Management (Responsibility) (Amendment) Bill which was placed on the order paper of Parliament on the 8th of March 2013. The Fiscal Management Responsibility Act was passed in 2003 with the objective to reduce government debt to “prudent levels” and to manage the financial risk faced by the State.
The proposed amendment increases the permissible levels of Government guarantees for borrowing (obtained by State and non-State institutions) and thereby increases the financial risk faced by the country over a period of time. Furthermore the proposed amendment authorises the increase of the permitted level of total liabilities of the Government from the 60% of the estimated gross domestic product (GDP) for the financial year to 85% at the end of the financial year commencing on the 1st of January 2013. In addition the government will be able to maintain government debt to GDP as a percentage of GDP at 80% up until the 31st of December 2020 whereas under the original Act it was meant to be reduced to 60%. This would mean that, if the amendment is enacted, the government would not be compelled to implement strategies to reduce its debt over the next decade.
In accordance with the Constitution, the Parliament is mandated to ensure full control over public finance. However neither the loans obtained or guarantees given on borrowings are individually authorized by Parliament. CPA is concerned that the proposed amendment is part of a continued effort to reduce Parliamentary oversight over public finance which is essential to promote accountability, transparency in the manner in which tax payer money is spent and could have a detrimental effect on future generations. CPA has on several occasions in the past challenged Bills of Parliament which if enacted would result in Parliament losing full control over public finance (CPA challenged the Appropriation Bill in 2007 and 2012 on this basis). The Supreme Court listed the matter for hearing on 21st and 22nd March 2013. The Supreme Court held that the bill is not inconsistent with the provisions of the Constitution. The bill was passed by Parliament.