To my mind
NOT OFTEN HAVE so many people in South Africa had so much to say about an event. Opinions about Trevor Manuel’s announcement that he’d resigned as Finance Minister were many and varied. Some believed it was all a matter of ego: that he’d wanted to demonstrate what kind of reaction such an announcement would trigger. Manuel himself has explained he resigned because he couldn’t stay on as a minister once the president who had appointed him had stepped down, and that this practice was fairly common in other countries.
That Manuel declared himself willing to serve in the Cabinet of the acting President shortly after his resignation is dismissed as mischievous by some commentators. However, more serious market observers and economists did point out it was important that if Manuel were to serve in the new Cabinet he should be seen as part of the new dispensation and not as a mere remnant of the Mbeki camp.
Regardless of what people had to say about the Manuel saga, one thing was patently clear: that the rest of the world attaches enormous value to sound fiscal policy. Even the forced resignation of Mbeki had comparatively little effect on the markets. Yet within a few minutes of Manuel‘s stating he would resign the rand plummeted – the clearest indication of sentiment towards events in the country.
The predominant message to the leaders of the new ANC faction is that they should approach policy decisions very carefully and with due consideration of economic realities.
The reaction – as exemplified by the weakening rand – is the clearest sign the rest of the world views uncertainty about future fiscal policy very negatively. The risk involved in such a scenario certainly doesn’t encourage the inflow of foreign capital, without which SA’s current account deficit, which has climbed to a disturbing 7,3% of gross domestic product, can’t be reduced.
One can only hope our new leaders – who have already won the favour of leftist factions, such as trade union Cosatu and the SA Communist Party, which have the concerns of the working class, the poor and the unemployed masses at heart – will remain aware of that reality. It’s one thing to make empty promises of jobs for all, lower interest rates and higher wages and an entirely different matter to ensure the financial figures will tally over the long term.
In the same week that ANC decision makers are patting themselves on the back for their success in getting rid of Mbeki as part of an orchestrated attempt to deal Jacob Zuma’s prosecution a death blow, the financial services sector in the US was facing a mammoth crisis, necessitating a US$700bn rescue plan.
It would be shortsighted of the new ANC leaders to refuse to acknowledge that under Mbeki’s leadership, with people like Manuel in critically important posts and thanks to responsible economic policy, SA was safeguarded against fiascos such as the sub-prime mess in the US.
Hopefully, it will give them food for thought during the formulation of policies and the appointment of those who have to implement them.