Rand breaches R14.50/$ amid move on Trea­sury for Zuma’s free fees plan

Chronicle (Zimbabwe) - - Business -

CAPE TOWN — The rand has breached R14.50/$ yes­ter­day as news fil­tered through of Pres­i­dent Ja­cob Zuma’s seem­ingly im­mi­nent plan to push through free higher ed­u­ca­tion.

The rand, which opened at R14.40 to the US dol­lar yes­ter­day af­ter hit­ting R14.43/$ in early Asian trade, spiked to R14.50 against the green­back by 10:45 amid re­ports of the Pres­i­dency’s in­ter­fer­ence at Na­tional Trea­sury to push through Zuma’s fee plan.

By 11:15 the lo­cal unit has spiked to R14.51 to the US cur­rency, a 16-month low af­ter re­ports that Michael Sachs, a deputy di­rec­tor gen­eral who headed up the bud­get of­fice, quit last week.

Fin24 has ob­tained in­de­pen­dent con­fir­ma­tion from two sources close to Trea­sury that the Trea­sury veteran of ten years re­signed as the is­sue of free higher ed­u­ca­tion was steam­rolled by Zuma. “Michael didn’t nec­es­sar­ily op­pose the idea of free ed­u­ca­tion, but he wouldn’t stand for the in­ter­fer­ence in the bud­get process,” a source said.

Zuma’s plan to find R40bn within the con­strained bud­get to fund a free-ed­u­ca­tion pol­icy for fam­i­lies who earn less than R350 000 comes amid changes to the bud­get process, where Na­tional Trea­sury’s role in keep­ing a lid on govern­ment spend­ing and find­ing the best ways to grow the econ­omy has taken a back seat to the Pres­i­den­tial Fis­cal Com­mit­tee (PFC).

Sachs and other se­nior of­fi­cials were ap­par­ently un­able to go along with the new bud­get process to cut R40bn from the cur­rent medium-term bud­get pol­icy state­ment to fund the pro­posal, Busi­ness Day re­ported yes­ter­day.

RMB cur­rency strate­gist John Cairns said the threat that free higher ed­u­ca­tion will be an­nounced soon will con­tinue to weigh on the mar­ket “to­day (and multi-week), but we could see some pull­back” as data and events risks are mod­er­ate. “Fears that Pres­i­dent Zuma is set to an­nounce free higher ed­u­ca­tion will con­tinue to weigh, par­tic­u­larly as al­most every broad­sheet in the coun­try read the story on the front page over the week­end.

“The Pres­i­dent’s state­ment on the is­sue has only clar­i­fied that he did not want — as al­leged in the Sun­day me­dia — to make the an­nounce­ment dur­ing his State of the Na­tion Ad­dress, and adds noth­ing on his cur­rent think­ing or planned ac­tions,” Cairns told in­vestors yes­ter­day. — Fin24

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