Gordhan needs to ‘restore confidence’ – DA

2012-10-23 13:31

Finance Minister Pravin Gordhan should use his medium-term budget policy statement (MTBPS) to Parliament on Thursday to place a firm hand on the tiller, the Democratic Alliance said.

He should provide the leadership to cut through the government’s mixed messages on the economy, said DA spokesperson Tim Harris.

“He needs to send a strong signal that debt will not be allowed to rise to unsustainable levels, and that wasteful expenditure will be cut across government,” said Harris.

“Most importantly, he must show investors that he is firmly in charge of economic policy, and that the government is able to implement a clear plan to ensure that South Africa is a place where they can do business.”

South Africa was in the eye of an economic storm, because national government, from the president down, had failed to speak with one voice on the economy.

Government had also been unable to steer South Africa onto a path of higher growth, despite the country’s abundant assets, he said.

In his MTBPS, Gordhan should firmly dispel fears that government would bow to pressure from its tripartite partners to implement unsustainable, populist policy and commit to containing national debt to levels about 40% of gross domestic product over the medium term.

Among other things, he should announce a programme of wholesale policy reform and implementation of the proposals contained in the National Development Plan, starting with the departmental budgets announced in February next year.

Steps should be introduced to rein in irregular and wasteful government spending and improve accountability for accounting officers in national government departments presiding over wasteful, irregular, or unauthorised spending.

Further, public-sector pay should be aligned with productivity to incentives efficiency in government spending.

Policy steps should be implemented to address the systematic drivers of strike action, which diminished productivity and tax revenues, and undermined political and economic stability.

“The challenge facing minister Gordhan is to reassure both local and foreign investors of South Africa’s political and economic stability,” Harris said.

“He needs to do this while convincing credit agencies and economists alike of the soundness of his plans to consolidate the fiscus.”

Congress of the People spokesperson Nick Koornhof said there were “huge question marks” about leadership in South Africa.

Against this background, Gordhan had to rise to the occasion to defend and uphold strong fiscal discipline when he delivered the MTBPS.

“This is a vital moment for SA – our social contract is under siege, we cannot even consider to have a weak finance minister.

“Thursday is Pravin Gordhan’s moment to try to restore some lost ground in terms of the perception of credit rating agencies and investors have about us,” he said.

The expediency allowed during President Jacob Zuma’s tenure had to end. Bad administration and leadership were pushing the eye of the storm towards South Africa’s shores.

“We get the feeling that ministers and their departments were not taking the world economic crisis seriously.”

Gordhan had to restore confidence and should not let go on strong fiscal policy, despite a lower growth rate and a growing deficit, Koornhof said.

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