(Reuters) – South Africa’s parliament on Thursday adopted a draft bill allowing the legislature more power to amend the national fiscal framework and revenue proposals, an unprecedented move which comes as economic policy is under scrutiny.
International investors are concerned Africa’s strongest economy was tilting to the left since the removal of business-friendly President Thabo Mbeki, who has overseen sustained economic growth around 5 percent the last few years.
Mbeki was toppled by Jacob Zuma as president of the ruling African National Congress, and was likely to become South Africa’s next state president in 2009.
But Zuma’s close allegiance to trade unions and communists has scared risk-averse investors already rattled by a global credit crisis, despite assurances from him that South Africa will not change its market-friendly economic policies.
The draft bill, which must still be passed by the legislature before being signed into law, sought to establish procedures to amend money bills before parliament.
“One of the key features of this bill is that parliament will be required to vote on the fiscal framework which should be part of the medium-term budget policy statement,” Nhlanhla Nene, chairman of parliament’s finance committee told members of parliament.
Special appropriation committees will help determine spending priorities for government, Nene said, adding the bill made provision for key economic assumptions underlying the fiscal framework to be tabled and debated.
Money bills are bills that appropriate money, or impose, abolish or reduce exemptions from national taxes, levies or surcharges.
However, Nene emphasised any interventions in the budget should take cognisance of the macroeconomic environment.
“Should the need arise to amend the fiscal framework, utmost care should be taken that parliament does not undermine macroeconomic stability,” he said.
Finance Minister Trevor Manuel, in a speech in May, said he supported the proposed reforms.
“I hope that such legislation can be finalised speedily so that parliament can begin to build the capacity required to engage effectively on the budget,” Manuel said then.