/ 23 February 1998

ANC set to shift Gear

MONDAY, 12.00NOON:

THE government may be forced to revise its tough stance on the fiscal control and budget-deficit targets laid out in its growth, employment and redistribution (Gear) strategy, and find a balance between practising rigid fiscal control and addressing the “social deficit” highlighted by cutbacks in education, health and other social services.

Commenting on last week’s three-day meeting of the African National Congress’s national executive committee, ANC secretary-general Kgalema Motlanthe said there was frank and candid discussion of Gear’s targets and, while fiscal targets will be adhered to this year, they will be reviewed thereafter as the government adopts a more socially informed view on macroeconomic policy.

“There is an acceptance that nothing is cast in stone,” Motlanthe said. “Overall, the commitment to Gear is still there, but the NEC recognises that we have to look at the total situation … the budget must be an instrument of the strategic transformation of our society and economy,” he said.

The NEC adopted a plan, acknowledging trade union pressure that social needs not be ignored in favour of social targets, to target key areas of delivery: education, crime, housing, corruption, job creation and HIV/Aids.

Meanwhile, the financial and fiscal commission, which advises government on provincial finances, has criticised the government for the speed with which it implemented its fiscal reduction plans. The commission advised that big public service salary increases in 1996 had created the wrong climate for a sudden decrease in the deficit, resulting in “cuts in capital spending”, but with “general overspending by the government”. The commission supported a call for increased flexibility in Gear’s deficit targets.

Bullion drags all-share index down

MONDAY, 5.45PM:

THE financial and industrial indices of the Johannesburg Stock Exchange were lifted on Monday by stabilising Asian markets, the perceived easing of US-Iraq tension, and rumours of mergers and acquisitions. As ever, declining bullion prices knocked the gold index. Added to Merrill Lynch’s downgrading of De Beers from accumulate to neutral, which knocked the key stock down 4,41%, this gave the all share index something of a beating.

The all gold index closed down 42,9 points at 750,6, the industrial index reached up 75,9 points to 8025,9 and the financial index 119,1 points to 12316,2. The all share index finished 23,5 points up on 6826.

More than R1,062-billion worth of shares were traded.

Bonds softened somewhat on Monday. At 4.10pm the benchmark R150 government long bond was quoted at a 13,31% yield — six basis points down, after trading between 13,275% and 13,31%. The longer-dated R153 bond was last at 13,50% — also six points softer.

At 4pm the rand was quoted at R4,9475-05 to the dollar from R4,9480-10 on Friday, having traded between R4,9470 and R4,9600.

Gold last traded at $293,30-80 an ounce, after being knocked by sudden drops in the silver and oil prices, from $297,00-50 at Friday’s New York close.