Door still open for nuclear deal
But Gordhan says SA won’t spend money it doesn’t have
LESS than a day after his reappointment as finance minister, Pravin Gordhan was already tightening the purse strings, saying the country would not spend money it doesn’t have. Despite this, Gordhan confirmed the door remains open to an ambitious nuclear build programme – estimated to cost up to R1 trillion – following last week’s cabinet discussion of the issue. He said such a deal could take place if the country had the money.
While emphasising fiscal prudence, Gordhan also undertook to maintain pro-poor spending and growth-inducing incentives.
The decision to go nuclear was yesterday confirmed by Gordhan – “There will be a formal procurement process” – although Minister in the Presidency Jeff Radebe did not utter a word about this at the briefing following last Friday’s cabinet meeting.
Meanwhile, Gordhan made it clear that he would take a firm line with the financially and governance troubled SAA. He reiterated former finance minister Nhlanhla Nene’s decision to halt a restructuring of a proposed Airbus leasing deal because it would leave the national airliner worse off.
Before tomorrow’s public holiday there would have been a telephone conversation between Gordhan and SAA board chairwoman Dudu Myeni, who is close to President Jacob Zuma and has driven the restructuring, although further discussions are only likely take place early next year.
“We have been clear that one of the risks to our fiscal framework is the financial state
of state-owned companies. Let me emphasise that any support to these companies will be done in a fiscally sustainable manner,” Gordhan told journalists yesterday at a briefing also attended by finance deputy minister Mcebisi Jonas, National Treasury director-general Lungisa Fuzile and Reserve Bank Governor Lesetja Kganyago.
SAA, the nuclear programme and efforts to contain government expenditure were touted as reasons for the abrupt substitution of Nene with little known ANC MP and former Merafong mayor David van Rooyen, who has now replaced Gordhan at the co-operative governance and traditional affairs portfolio.
The IFP and DA yesterday criticised that shift, both pointing out Van Rooyen’s less than stellar financial and political track record in Merafong.
Yesterday’s briefing promoted a view that market and bond losses of up to R300 billion are being recouped, while the rand had strengthened on the back of Gordhan’s return as finance minister.
“I have received many representations to reconsider my decision. As a democratic government, we emphasise the importance of listening to the people and to respond to their views,” said Zuma in his announcement of the second cabinet change in four days, late on Sunday night.
The announcement came after a turbulent five days which also saw public criticism of the initial decision to replace Nene from civil society, business and religious representatives, a “crisis” meeting with ANC alliance partners, the labour federation Cosatu and the SACP on Friday night, and a social media campaign #ZumaMustFall.
That campaign will come to Parliament early next year if DA leader Mmusi Maimane has his way. Yesterday, Maimane announced he had requested a motion of no confidence debate in the National Assembly after MPs return in late January.
“The people of South Africa have lost confidence in Jacob Zuma and hundreds of thousands have expressed their intention for Zuma to fall. Now Zuma can fall, in January 2016, when Parliament can take up the cause of enraged South Africans and can vote President Zuma out of office,” Maimane said.
Freedom Front Plus leader Pieter Mulder similarly argued while Gordhan’s appointment is welcomed to restore confidence in the economy, it did not restore confidence in Zuma.
However, while Cosatu, the SACP and even the ANC “noted” Van Rooyen’s appointment last week, Gordhan’s appointment as finance boss was “welcomed” by the ANC and SACP, although Cosatu expressed reservations as Gordhan was “not a friend of the working class”.
However, Cosatu said it respected “the president’s attempts and efforts to fix what people of this country were objecting to. We wish the new ministers well”.
Gordhan faces low economic growth and high unemployment in the wake of last week’s brutal reaction from financial markets.
“Our expenditure ceiling is sacrosanct. We can have extra expenditure only if we raise extra revenue,” he said, adding this could be by cost-cutting, increasing efficient expenditure across government and/or selective changes to tax policy.
“I want to be very clear: we will not cut pro-poor programmes, growth inducing programmes and investment. Instead we will seek to increase investment in the 2017 budget.”
DA MP and finance spokesman David Maynier yesterday cautiously welcomed the finance minister’s plans – and his unconditional backing of his director-general, who was also rumoured last week to face the boot. “To restore confidence and trust today the minister will have to demonstrate he has the political space to do what is required to save the economy and avoid ‘junk status’ in South Africa,” Maynier added.
Gordhan said: “My job is not to be happy. My job is to serve you (as South Africans) and to do so with enthusiasm.”