Gordhan: I'm a pragmatist, not a communist

Finance Minister Pravin Gordhan says he is aware of the political debate raging about economic policy, but will not be swayed from being “pragmatic” and “sensible”.

“Political judgement and understanding the political context is part and parcel of making decisions,” he told reporters on Tuesday, ahead of delivering his much-awaited first mid-term budget in the National Assembly.

“But politics does not mean making wrong choices, because we are pragmatic. We are very sensible people.”

The former revenue service boss’ first budget pronouncement comes amid demands from the Congress of South African Trade Unions and the South African Communist Party that Economic Development Minister Ebrahim Patel be recognised as government’s architect of economic policy.

The ruling party’s allies had voiced fears that former finance minister Trevor Manuel was trying to micro-manage the economy in his powerful new position as minister in the presidency responsible for planning.

Zuma last week reorganised government clusters and left Manuel out of the economics group, in what was seen as an attempt to appease the left.

Opposition parties this week urged Gordhan to show that he was driving economic policy and to resist being pushed to the left.

Gordhan on Tuesday set the record straight on his reputation as a communist, and said he would be driven by “reality” and not ideology.

He said he aligned himself with the SACP in the 1970s and explored Marxist methodology as a set of humane values and a way of achieving greater social justice.

But he added that he was not a member of the party at present and would be informed by all views.

Treasury’s aim was to “do our damnedest for the best interests of all our people”, he said.

Excahnge controls
Gordhan eased exchange controls on Tuesday in an effort to stimulate investment in South Africa’s flagging economy.

He said the move was aimed at reducing red tape and the cost of doing business.

Foreign capital allowances are to rise significantly, while the amount companies can invest overseas will increase tenfold.

According to the document, proposed reforms include “increasing the current R50-million limit for company applications to undertake outward investment to R500-million”.

Further, it says foreign capital allowances for individuals will be increased from R2-million to R4-million, and the single discretionary allowance from R500 000 to R750 000.

More policemen
Gordhan is planning for an extra 22 447 police officers to be recruited by the 2012/13 financial year, primarily to strengthen detective services and crime intelligence.

“Government is determined to curb the unacceptably high level of crime,” he said.

No extra funds for Eskom
Treasury’s adjusted budget estimates make no provision at all for additional funding for Eskom, which claims it has a shortfall of about R40-billion on its infrastructure expansion programme.

Gordhan conceded that this meant the shortfall would have to be recovered from the staggering price increases demanded by the state electricity provider.

“There is no new money,” he told reporters.

Gordhan said, however, that Treasury was deeply concerned about the effect of price hikes on households and businesses, and would continue to look for alternative ways to find more funding for Eskom and reduce pressure on consumers.

Concern at strong rand
Gordhan said that he is concerned about the strong and uncompetitive levels of the rand at the moment and wished authorities had the capacity to intervene in a more assertive way than is available at present.

He said, though, that Treasury would assist to increase foreign exchange and gold reserves beyond the $40-billion mark.

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