Fiscal Rule to Help Steady South African Debt, Central Bank Says

South Africa risks a debt trap after years of lax budget discipline, but following through with plans for a fiscal rule to control borrowing will put it back on track, the central bank said.

The country’s annual debt-service costs have surged to a projected 18.4% of government spending in the current fiscal year from 8.6% in 2008-09, squeezing out expenditure on essential services and forcing the government to adopt what critics call an austerity budget to stabilize public debt.