Frequently Asked Questions (FAQs)

What is the FFC?

The Financial and Fiscal Commission (FFC) is a permanent expert commission mandated to make recommendations and to provide advice to organs of state in the national, provincial, and local spheres of government. It was initially established in terms of Section 198 of the Constitution of the Republic of South Africa, Act 200 of 1993. Its existence was confirmed in Section 220 of the Republic of South Africa Constitution Act No 108 of 1996 as amended.

Why was the FFC established?

Given that most of the government revenue in South Africa is collected by national government, it was considered important that this revenue be divided equitably amongst the three spheres of government (the “vertical division” or revenue). Once this (vertical) division has been made, it is equally important that the local and provincial shares are equitably distributed amongst municipalities and provinces (the “horizontal division” of revenue).

Is the FFC part of government?

The FFC is not part of the Government of the Republic of South Africa. It is an organ of state purposely established by the Constitution as separate and independent of Government. The FFC does however and in the spirit of Chapter 3 of the Constitution, frequently interact with government stakeholders as part of its overall consultation process and in order to obtain data and information that is necessary for it to fulfil its constitutional obligations.

What does the FFC do?

The FFC submits recommendations and advice to all spheres of government based on research and consultations on a range of intergovernmental fiscal issues. The research includes:

• Development of principles for intergovernmental fiscal relations, which are based upon analysis of international best practice;

• Analysis of local, provincial, and national government budgets, with a view to understanding revenue and expenditure trends;

• Identification and measurement of factors influencing provincial and local revenues and expenditures; and

• Assessment of fiscal policy instruments, such as conditional grants, equitable share transfers, and taxes.

• Government is required by the Constitution and other legislation to consult with the FFC on issues such as:

• Provincial and local government revenue sources;

• Provincial and municipal loans; and

• The fiscal implications of the assignment of functions from one sphere of government to another.

What reports does the FFC submit?

In accordance with the Intergovernmental Fiscal Relations Act of 1997, the Commission submits its recommendations on the division of revenue before the Minister of Finance tables the budget in Parliament in February. The FFC’s Annual Submission addresses issues that relate to the next budget year and to the Medium Term Expenditure Cycle. Shortly after the tabling of the budget, the FFC responds to the budget in its Division of Revenue Bill Submission (March). This outlines Government’s response to the FFC’s previous recommendations and provides an analysis of Government budget inputs, outputs, and outcomes. In addition, the FFC makes occasional submissions in response to requests from organs of state.

How does the government respond to the FFC's annual reccomendations?