Proposals are not in line with policy, says Mboweni
ONE OF THE BIGGEST CONSTRAINTS TO ECONOMIC GROWTH IN SA IS LACK OF IMPLEMENTATION ON THINGS WHICH HAVE BEEN DECIDED UPON
Submissions for the Treasury’s economic strategy document proposing that SA dispense with inflation targeting, or embark on looser monetary policy, have been given short shrift by finance minister Tito Mboweni.
In his opening remarks at an economic colloquium on Thursday, Mboweni said he had told Treasury officials that ideas that were “internally inconsistent with what we are trying to achieve” should not be taken on board.
He gave examples of proposals to abandon inflation targeting to boost the economy, or demands that the Treasury instruct the SA Reserve Bank to employ looser monetary policy and cut interest rates. While these ideas could be given “good ventilation”, they are inconsistent with the government’s policy framework, he said.
The Treasury document, which was released in August, proposed a range of reforms that could be implemented to stimulate economic growth.
The Treasury called for public submissions that would be considered in the drafting of an updated version.
The expectation is that the updated document will be presented with the upcoming medium-term budget policy statement, according to Mboweni.
But the document drew criticism from the ANC’s alliance partners the SA Communist Party and Cosatu. There is also internal tension within the ANC after the party resolved to change the mandate of the central bank to cater for job creation and economic growth, and to nationalise the bank.
Mboweni highlighted the problem of implementation and the difficulty of getting economic actors in the economy “to pull in the same direction”.
“One of the biggest constraints to economic growth in SA is lack of implementation on those things which have been decided upon,” he said.
This speaks to “the capacity and capability of the state to implement”, he said.
He gave the example of the criticism levelled at anyone who questions the extension of collective bargaining agreements to non-parties, or the appropriateness of the level of the national minimum wage. “They don’t want to talk about it, and you get stuck,” he said. Both policies are strongly supported by the ANC’s labour allies.
Thursday’s event included economists, academics and government officials, as well as a number of the members of an economic advisory council named by Ramaphosa.
It came as SA awaits the medium-term budget policy statement, which Mboweni announced would likely be moved a day earlier than planned, to October 29.
The timing of the mediumterm budget already had been moved from the second last week of October to the 30th. The step was intended to cater for the international travel commitments of the president.
The budget policy statement is being keenly watched by business, investors and ratings agencies. Mboweni is expected to outline the state of the government’s finances after additional spending pressure to shore up troubled power utility Eskom. Poor economic growth and lower tax revenues are expected to weigh on the budget.