/ 10 January 2008

Manuel not concerned over future fiscal policy

Finance Minister Trevor Manuel said on Thursday that he did not have any concerns about the direction fiscal policy might take following the victory of Jacob Zuma at the African National Congress’s (ANC) leadership conference in Polokwane last month.

In reply to a question at a press briefing on the margins of an Organisation for Economic Cooperation and Development gathering of tax collectors from around the world in Cape Town, asking if he had any such concerns for the future, he said simply: “No,” adding: “No, I don’t have any.”

He said fears about fiscal policy were just so much hype. “I just hope that we reach a point where instead of going to somebody who feeds information that can’t be traced,” he said, “we have a professional relationship with the media, where our word can be trusted and we can act as professionals together.

“Part of our frustration is having to fight a defensive battle against sources all the time. And it’s not helping you, it’s not helping us. It’s even worse when sources produce lead stories in newspapers day after day that are completely without foundation.”

Supporters of the new ANC leader made it very clear at the Polokwane conference that they were unhappy with the way that inflation targeting was working. Union representatives, and leaders of the South African Communist Party and the ANC Youth League, wanted to see significant changes made to the government’s fiscal stance.

In particular, they were anxious to see the interest-rate policy take account of the need for growth, job creation and poverty alleviation. They were also pushing for the renationalisation of companies that were formerly state owned, and income grants for the poor.

Zuma said last month, however, that no substantive policy changes were planned.

However, opposition parties have been anxious to defend the government’s current stance.

Kobus Marais, who speaks on finance for the Democratic Alliance, said this week that it would not be to the benefit of South Africa if the newly elected ANC leadership focused all its attention on the inflation-targeting mechanism, “without viewing it in the broader macroeconomic policy context of the country, or at the cost of addressing the number of real economic issues on which the ANC government has failed to deliver”.

“As an important emerging market, South Africa has earned the respect of investors worldwide under the able leadership of finance minister Trevor Manuel and Reserve Bank Governor Tito Mboweni,” Marais added. “The reason for this is largely their discipline in making policy choices within a clearly defined fiscal and monetary policy framework that provided the necessary certainty and stability.”

He said: “It would be to the detriment of all South Africans, poor and rich, if the newly elected ANC leadership sought to undermine the level of credibility which South Africa has attained on the global economic stage for petty, intra-party political reasons.” — I-Net Bridge