'ANC handling transition badly'

2008-09-23 15:48

Greta Steyn

Johannesburg - Finance Minister Trevor Manuel's resignation and subsequent comment that he would be prepared to serve again if asked is evidence that the ANC is handling the transition to a new president badly, economists say.

They warned that the consequences would be felt in the markets, where judgement would be harsh. The analysts Fin24.com spoke to called on the ANC to provide certainty, not only about the personalities in key finance positions, but also about the policies that the next Finance Minister - whether it was Manuel or not - would follow.

Sanlam economist Jac Laubscher said the key issue at the moment was policy continuity, and not necessarily who the minister of finance would be. Even if Manuel was appointed again, the message to the markets was that the ANC wasn't handling the transition well.

"Manuel's resignation underlines the question as to what is going to happen to policy next year after the elections, when the real transition takes place. So far, we have seen contradictory comments from different people, including that policy won't change. But one won't be able to judge from words alone; there will only be certainty once the new administration has been in place for long enough to judge them by their actions," Laubscher said.

Stanlib economist Kevin Lings said there was a policy vacuum at the moment which needed to be urgently addressed. Normally, when there was a change in government, the incoming administration made it very clear what their new policies were. This wasn't happening in SA and was highly problematic for the markets.

"When there's this much uncertainty, markets will be nervous," Lings said. In the immediate future, there would be uncertainty about the mini-Budget, scheduled for 21 October, and the main Budget, in February next year.

Another point that Lings emphasised was that the replacement of ministers would have an effect on government programmes already in place. "I am worried about the disruption of initiatives in government departments that are starting to deliver after years of struggling to get off the ground. This is a big risk. Programmes might stall at the critical phase. Examples are government's infrastructure spending programme, including the 2010 World Cup."

T-Sec economist Mike Schüssler said the ANC had to "learn how to govern". He said it was essential that the next finance minister be appointed as soon as possible, and that policies be spelled out clearly at the same time. "It's not good enough to say that things won't change, because some elements will change. We've had these comments from Cosatu and the SACP who seem to want us to go back to the nineteenth century with economic policy that never worked. Business people are worried about their comments and we urgently need indications that these aren't the policies that the ANC will follow."

- Fin24.com

- Finance24