The 140-page study, which was released jointly by OECD Secretary-General Angel Gurría and Finance Minister Trevor Manuel at a function in Johannesburg on Tuesday, indicated that a case could be made for the tightening of fiscal policy to sustain a Budget surplus as a safeguard against macroeconomic instability.
"Over the longer-term there may be a case for introducing a fiscal rule, or a more systematic way of capturing commodity price windfalls," the study concluded.
Speaking at the release of the report, Manuel indicated some "regret" at having followed advice in 2006 not to impose windfall taxes on South Africa's synthetic-fuel producers, including JSE-listed Sasol.
He said that, at the time, oil was trading at about $60/bl and it was felt that the benefit would not have been material. However, he noted that at $140/bl, the scenario had changed dramatically.
"Sometimes the advice you take, you live to regret," Manuel said.
However, he did not indicate that there would be any immediate move to reverse the decision, or to broaden a windfall-tax framework to other resources sectors.
But Manuel pointed out that South Africa's Budgetary processes currently took account of surpluses that might be accruing on the back of the "commodity super-cycle".
"We are now accounting for those (windfalls) . . . so as to avoid a situation where recurrent expenditure is premised on revenues that may not be there in the future," Manuel asserted, suggesting that South Africa was, thus, internalising fiscal counter-cyclicality with regards to commodity price swings.
The OECD effectively urged South Africa to sustain its surplus, while acknowledging that such as move could be politically unpopular. This was in line with a recommendation contained in a recent report developed by the so-called Harvard Panel.
The panel argued that South Africa's growth path should be to create jobs through exports. It, thus, proposed that macroeconomic policy instruments be re-calibrated to facilitate export-oriented growth. This, it argued, implied making exchange rates more "competitive", with the Budget surplus helping to reduce borrowings and increasing savings.
The proposal has come in for some criticism from those proposing a ‘developmental State' model, given that the macroeconomic policy framework would undermine the ability of fiscal policy fundamentally to alter the structure of opportunity in South Africa.
Moreover, the OECD report raised some questions about whether the level and volatility of the rand was in fact a constraint to economic growth as had been proposed in the development of the Accelerated and Shared Growth Initiative for South Africa (Asgisa), which was currently the country's guiding economic framework.
Asgisa's authors, drawing on research performed by Harvard economists, singled out the exchange rate for special critique when the policy was released in 2006.
It was argued that the currency was not only overvalued, but that its relative volatility was discouraging foreign direct investment. The thesis was that the volatility made risk-averse firms less willing to invest, given that the risk of bankruptcy could be precipitated by adverse currency movements.
But quoting other research, including research conducted by the International Monetary Fund, the OECD report noted that no evidence had been found to show negative effects on South Africa's trade channel as a result of volatility, while another study could found no adverse effect of exchange rate volatility in countries with well-developed financial systems.
"At least a few countries, especially resource-rich ones, have grown rapidly despite high levels of exchange rate volatility," the report noted.
But it also suggested that that there was "little substance" to policies to tackle the perceived problem, which it argued "may not be a bad thing".