BLSA sees junk risk

TREA­SURY RES­IG­NA­TION: UN­DER­MINES THE IN­STI­TU­TION’S CRED­I­BIL­ITY

The Citizen (Gauteng) - - BUSINESS - Ray Mahlaka

Par­lia­ment must ap­prove bud­get, not the pres­i­dency, say busi­ness lead­ers.

Busi­ness Lead­er­ship SA (BLSA) CEO Bo­nang Mo­hale says the de­par­ture of Na­tional Trea­sury’s long-stand­ing bud­get head Michael Sachs is “of enor­mous con­cern” as it adds to an ex­o­dus of ex­per­tise at the in­sti­tu­tion, which “un­der­mines” its cred­i­bil­ity.

Trea­sury con­firmed on Mon­day that Sachs, who has been at the in­sti­tu­tion for eight years and headed the bud­get of­fice re­spon­si­ble for craft­ing the na­tional bud­get, had re­signed.

“Sachs is an­other in a line of ad­mirable and com­pe­tent pro­fes­sion­als leav­ing what is ar­guably our most im­por­tant min­istry tasked with the eco­nomic wellbeing of the coun­try,” said Mo­hale.

Al­though Trea­sury didn’t ex­plain the rea­son be­hind his res­ig­na­tion, me­dia re­ports sug­gested he re­signed last week due to Pres­i­dent Ja­cob Zuma’s in­ter­fer­ence in the in­sti­tu­tion’s fis­cal and bud­getary pol­i­cy­mak­ing process.

Zuma is push­ing for a free higher ed­u­ca­tion pol­icy for stu­dents of fam­i­lies earn­ing a com­bined an­nual in­come of not more than R350 000. The pol­icy would cost a con­strained fis­cus R40 bil­lion and put Trea­sury’s bud­get­ing process un­der sig­nif­i­cant strain. The Pres­i­dency has de­nied this.

Mo­hale warns that Trea­sury’s lat­est lead­er­ship change comes be­fore credit rat­ing agency Moody’s pub­lishes its re­view of SA’s sov­er­eign credit rat­ing on Novem­ber 24. A down­grade to junk of SA’s for­eign and lo­cal cur­rency debt by Moody’s would be cat­a­strophic, as SA could lose its spot in Cit­i­group’s World Gov­ern­ment Bond In­dex.

Trea­sury’s bud­get­ing process has been del­e­gated to the pres­i­den­tial fis­cal com­mit­tee (PFC), over­seen by Zuma. “In his medium-term bud­get pol­icy state­ment, Min­is­ter Gi­gaba told us about a new struc­ture in the Pres­i­dency to over­see ex­pen­di­ture in the Trea­sury. We at BLSA are of the view that this could vi­o­late the con­sti­tu­tion,” said Mo­hale.

He said par­lia­ment car­ries the ul­ti­mate re­spon­si­bil­ity for ap­prov­ing the bud­get, not the pres­i­dency. He added that sec­tions 215 and 216 of the con­sti­tu­tion en­sure trans­parency and ex­pen­di­ture con­trol, in­clud­ing “the right of the Trea­sury to stop the trans­fer of funds to or­gans of state in the face of se­ri­ous or ma­te­rial breach of proper fi­nan­cial man­age­ment”.

“This lat­est de­vel­op­ment raises fur­ther con­cerns over the politi­ci­sa­tion of the Trea­sury and bud­get process and sends the wrong sig­nal to the peo­ple of SA.”

If Zuma pushes his pol­icy, it would un­der­mine Trea­sury’s role in keep­ing a lid on gov­ern­ment spend­ing and waste­ful ex­pen­di­ture and find­ing the best ways to grow the econ­omy.

Since Zuma’s Cab­i­net reshuf­fle in March, Trea­sury has been rocked by lead­er­ship changes. Along with the ax­ing of fi­nance min­is­ter Pravin Gord­han and his deputy Mce­bisi Jonas, di­rec­tor-gen­eral Lungisa Fuzile re­signed and deputy di­rec­tor-gen­eral Andrew Don­ald­son re­tired.

“Both the di­rec­tor-gen­eral [Dondo Mo­ga­jane] and I are aware of pro­tect­ing the in­tegrity and trans­parency of the bud­get sys­tem and process, and en­sure that all tax and ex­pen­di­ture de­ci­sion pro­cesses con­tinue to be run by the Trea­sury and min­is­ter of fi­nance, and con­tin­ues with the con­sul­ta­tive process in­tro­duced by the first demo­cratic gov­ern­ment,” Gi­gaba stated.

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