No clarity on Gordhan’s retirement

2014-02-27 00:00

IT WAS his fifth Budget as finance minister and the jury was still out on whether Pravin Gordhan would be around to deliver the sixth.

Last year there was speculation that Gordhan might retire from his post of

finance minister when his five-year term is up when the country goes to the polls on May 7. That would make yesterday his last Budget. But, according to at least one economist, there is also speculation that while Gordhan may have been considering his departure, he has been signed up for another contract period of three to five years.

Gordhan’s department has only answered obliquely about the notion that he will quit.

His spokesperson Jabulani Sikhahane said at the time that nothing was certain yet; the response, however, did not deny that Gordhan may be quitting. The finance minister, who is normally appointed by the president, turns 65 in April, the normal retirement age of most South Africans.

There has been speculation that Gordhan won’t even be available as a Member of Parliament for the ANC.

It is possible that Gordhan’s deputy Nhlanhla Nene may, for example, be able to succeed Gordhan without creating instability or investor uncertainty in the financial markets.

The appointment of a credible and able finance minister is essential in instilling market confidence in a country’s ability to manage a sustainable economy that grows.

Nene was also punted as a possible successor to Trevor Manuel in 2009, but Gordhan got the nod instead.

Imara SP Reid’s head of research, Stephen Meintjes, said Gordhan has done well as finance minister, even though he has fought hard battles to keep excessive state spending and public service salary growth under control.

“He is fighting back,” said Meintjes.

He said Gordhan’s appointment as finance minister after the long tenure of Trevor Manuel had always meant that Manuel would be a hard act to follow. “Manuel managed to generate a couple of surpluses,” said Meintjes.

The SA Revenue Services (SARS) and National Treasury were widely recognised to be the government’s two most effectively functioning departments, he said.

Economist Mike Schussler, of economists.co.za, said in a sense Gordhan got handed a “hospital pass” by Manuel in that Manuel had been widely praised, and Gordhan took office in the middle of a global recession.

“With Manuel the national debt went down, and with Gordhan it went up.”

However, the increase in debt was something that had to happen “in the sense of time”, said Schussler.

Debt levels are manageable and therefore not necessarily a negative aspect of Gordhan’s term, he said.

Schussler said the one negative aspect of Gordhan’s tenure so far has been the steady, above-inflation increases in the government wage bill.

Part of the reason he has not been able to control the spending in this area is that he is not in control of appointments by other government ministers.

The government salary bill is currently at 13,5% of the gross domestic product, which puts it in the top 10 of 80-90 countries that have such data, possibly even the top five, said Schussler.

Gordhan is also a member of the ruling party’s national executive committee.

Before being appointed as finance minister, he headed SARS for 10 years and was commended in that role.

Prior to that, Gordhan served as an MP in South Africa’s first democratic Parliament.

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