More make-do follows budget processComment on this story
WHEN the budget process got under way in July, there was a blunt message for government departments approaching with their begging bowls.
There would be no more “new” money from state coffers, and they would have to make do, for the next three years, with what they had been allocated in the February Budget.
What’s more, this wasn’t a treasury decision, but one endorsed by the cabinet, Finance Minister Pravin Gordhan stressed this week. There was “enough money in the system” for the government to do the things it had committed to do, he said, and made it clear the approach to spending the hundreds of billions earmarked for infrastructure would be laced with caution and careful checks.
Any department wanting to do something new – that is, not budgeted for in the medium term – would have to reprioritise the money from other programmes or make savings, he said. About R40 billion had been made in savings by taking money away from projects going nowhere and cutting fat. Billions more could be saved by scrutinising the state’s wage bill and rooting out ghost workers, irregular overtime and promotions.
Delivering his medium- term budget policy statement in Parliament on Thursday, Gordhan kept a firm hand on the fiscal policy tiller and trimmed the good ship SA’s sails against blustery ill-winds blowing abroad and at home.
But he faced a more than usually tricky act of helmsmanship this year.
Things were already tight for the South African economy before the damage wrought by the Marikana shootings on August 16 and the wildcat strikes that followed. Global economic prospects looked grimmer, with the emerging market powerhouses of Brazil, India and China seeing slowing production and exports.
At home, it took weeks for any sign of decisive response to the mining crisis by the government: by the time the talks convened by President Jacob Zuma brought business, labour and the government together, two ratings agencies had already had their say and the influential business journal, the Economist, was preparing a cover story headlined “Sad South Africa – Cry the Beloved Country”.
Downgrading SA’s sovereign debt rating means borrowing – and servicing that debt – will become that much more expensive. Considering that doubts about the country’s ability to manage its debt were a factor in the decisions, one could empathise as Gordhan railed against “inappropriate” judgment calls.
There were “too many people outside this country who are making judgment calls… who don’t understand our history well enough, who don’t understand where we come from as a country and as a political culture and who make negative pronouncements that are way out of line… with the realities of political developments in this country,” he said ahead of making his speech.
The decision to reel in government spending being made by the cabinet and not the treasury alone was a major factor, given the global and domestic economic stakes and the possibility of policy shifts post-Mangaung.
Now we must see if it is followed through, in the form of action against spendthrift bureaucrats and ministers.