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A house committee has told the National Treasury to ensure that the fiscal deficit and subsequent public borrowing projections are realistic.

In a report containing proposals on both policy and financial resolutions related to the 2024 Medium-Term Debt Management Strategy (MTDS), the Debt and Privatisation Committee emphasised the importance of incorporating forecasts on potential in-year changes to interest rates, exchange rates, and contingency spending to achieve this.

The 2024 MDTS aims to optimise access to concessional borrowing and undertake liability management to minimize costs and refinancing risks in the debt portfolio.

Financial resolutions in the report include approval of the country’s borrowing strategy, set at 55 per cent for net external borrowing and 45 per cent for net domestic borrowing, as outlined in the 2024 Medium-Term Debt Management Strategy.

“That, in the next Medium-Term Expenditure Framework (MTEF) cycle, the National Treasury ensures consistency between the Medium-Term Debt Management Strategy and the Budget Policy Statement regarding the optimal borrowing strategy and the fiscal consolidation path,” the report said.

To address the escalation of domestic interest rates and payments, the committee recommended that the National Treasury submit a report to the National Assembly within 60 days, outlining practical measures to reduce the domestic debt service burden to sustainable levels.

The committee also highlighted concerns regarding the depreciation of the exchange rate against major currencies and urged the National Treasury to publish guidelines ensuring the operationalisation of the Treasury Single Account by July 1.

Reads the report: “It is important to note that year deviations from fiscal targets negate the substantial efforts undertaken in designing a policy framework and strategies intended at reducing debt distress, slowing debt accumulation and improving overall resource utilisation.”