No sharp left turn in the budget

2009-10-28 00:00

CAPE TOWN — Management of the South African fiscus may be subject to economics rather than politics as stated earlier yesterday by Pravin Gordhan, but the finance minister also gave a nod to the left, claiming the country had to rethink its economic model.

Commenting in the Medium-Term Budget Policy Statement, Gordhan said pressure from the left in the ANC, trade federation Cosatu and the SA Communist Party was less important than the pragmatics of economics when guiding the fiscus.

However, growth had to become more inclusive and job-creating, he said, adding that this would require specific reforms that the cabinet’s economic cluster would explore in detail.

“We have to explore options for promoting the development of our mining industry, lowering costs in telecommunications and transport, expanding tourism, enhancing technology and developing further trade opportunities, drawing where appropriate on international experience,” he said.

”We know that our growth path has to include enhancement of the labour-absorbing capacity of the economy,” said Gordhan. “Employment brings the best prospects for permanent reductions in poverty,” he said.

Governments had to take the hassle factor out of doing business so that businesses could help drive the job creation process, he said.

These comments echo the findings of a report tabled by the Commission on Growth and Development, which looked at 13 countries that had succeeded in expanding national output and incomes by over 7% a year for at least 25 years.

According to the report, factors these successful economies had in common were that they fully exploited the world economy. “They imported what the rest of the world knew, and exported what it wanted,” said Gordhan.

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