SO, the first black finance minister presented his first Budget and the sky did not fall in. After a year of faux pas and financial market fiascos, Trevor Manuel did the impossible: he nigh on pleased all of the people, at least for a few hours. Parliament applauded, and the markets rewarded him with a firmer rand.
Expectations were plentiful, surprises not. He tinkered here, tweaked there, but within the confines of the government’s macro- economic strategy, there was very little room for fiscal latitude. But still he managed to shift the emphasis from taking to giving and kick-start the growth, employment and redistribution (Gear) strategy.
And that, in essence, clinched Manuel’s successful debut. The spending numbers and tax changes pale into insignificance beside the all-important confidence-booster provided by his – and the government’s – commitment to implementation and delivery, while keeping a tight rein on spending.
Manuel has the economy and investors’ goodwill on his side. The macro-economic scenario is favourable; growth, while not breathtaking, is adequate to provide a solid base on which to build in the next decade. Inflation is at its lowest in more than 20 years, the rand has stabilised and foreign reserves are looking healthier. All factors that enabled Manuel to present a bolder Budget than his predecessors, particularly with respect to easing exchange control regulations.
But Manuel’s Budget wasn’t just about making the headlines; there are measures to support small business, public works programmes, poverty relief, and to encourage investment and tax efficiency. And all the time the message of reprioritisation was hammered home – a “better life for all”.
After all the doom and gloom of 1996 it would seem churlish to cast doubts on such a positive Budget. But joblessness remains South Africa’s biggest problem; while some public works programmes were announced, they are insufficient to make a serious dent in the current rate of unemployment. Relying on investment incentives alone to boost private-sector job creation will not do the trick. And then there’s the problem of leaving implementation up to the provinces, which could lead to capacity problems and growing inequities.
That said, the African National Congress had a lot riding on this Budget, the first for which it was solely responsible. They are deserving of our congratulations.