HILARY JOFFE: Treasury needs to be open about costs and benefits of its borrowing
The National Treasury is borrowing more on the market than it theoretically needs to
What is it that the National Treasury knows about the future that we don’t? The question arises because it is borrowing more on the market than it theoretically needs to. With revenue now expected to run well ahead of budget projections in the current fiscal year, the government will have less need for financing. Yet the Treasury has stuck to its weekly borrowing schedule on the bond market, in the process amassing a quantum of cash.
That could well be taken as a sign that it expects things to get worse. Perhaps it simply doesn’t believe it will manage to hold the line on plans to stabilise government debt in coming years. Perhaps it believes the global environment will become more hostile. But borrowing more than strictly necessary comes at a cost, arguably quite a steep one for the government and the economy. And it could easily be read the wrong way, undermining confidence in the government's faith in its fiscal framework. At the very least, the Treasury might want to explain...