President Jacob Zuma’s new “spend now, pay later” populism in South Africa

The following speech was delivered by the DA Shadow Minister of Finance, David Maynier MP, during the debate on the Division of Revenue Amendment Bill in the National Assembly today.

Before we debate the merits of the Division of Revenue Amendment Bill [B24-2017], we should pause to consider the chaos in the budget process, which appears to have been manufactured by President Jacob Zuma who now seems determined to “take out” National Treasury.

The Minister of Planning, Monitoring and Evaluation, Jeff Radebe, tried to reassure us that there was “nothing to fear” from the new “budget prioritisation framework” during his briefing following the medium-term budget policy statement, on 26 October 2017 in Parliament.

However, yesterday we heard of the shock resignation of budget office “Tsar”, Michael Sachs, who is one of the most experienced, and one of the most capable, senior officials at the apex of the system at National Treasury.

The fact is that his resignation is a huge blow to National Treasury and confirms our fears that decision-making about budget priorities, and the budget itself, has now been centralised under President Jacob Zuma.

The Constitution itself requires that “budgetary processes” promote transparency, accountability and sound financial management, and yet we now have:

• a “Presidential Fiscal Committee” making decisions about the budget, which undermines the Minister’s Committee on the Budget;
• a “Mandate Paper” setting out budget priorities in terms of a new budget prioritisation framework, compiled by the Department of Planning, Monitoring and Evaluation, which undermines National Treasury; and
• that is not to mention rogue elements, such a Morris Masutha, who is reportedly peddling a R40-billion budget-busting plan for higher education, with the support of President Jacob Zuma.

What this means in practice is that in the middle of a “fiscal crisis” – which Michael Sachs himself described as the most challenging since the global financial crisis – decision-making on the budget has been plunged into chaos.

We have to face the fact that National Treasury are being “defanged” and reduced to “bookkeepers” with declining influence over budget priorities, and the budget itself, under President Jacob Zuma.

Things have got so bad that we are now not even sure whether government has abandoned fiscal consolidation, and its central fiscal objective, which is to stabilise national debt, in favour of a populist “spend now, pay later” fiscal policy under President Jacob Zuma.

Whatever the case, we can be sure that the ratings agencies, which are circling us like sharks, will have taken note and the probability of further ratings downgrades to “junk status” is greater today than it was the day before yesterday in South Africa.

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