Lay off criticising Treasury and ratings agencies — Gordhan
Finance minister says cabinet colleagues are privy to decisions on budget allocations
FINANCE Minister Pravin Gordhan has warned against the growing culture of political indiscipline by government leaders who publicly criticise National Treasury for not allocating them enough money.
In a wide-ranging interview with the Sunday Times ahead of the budget statement on Wednesday, Gordhan spoke of the importance of maintaining fiscal sovereignty, competitive and transparent procurement, and maintaining a transparent budgeting process.
He said preserving South Africa’s fiscal sovereignty while continuing to deliver services to the poor were at the heart of how he, and his colleagues in the ministers’ committee on the budget, thought about the budget.
Gordhan was at pains to explain that the process of allocating funds to government programmes was transparent and inclusive.
He said he did not understand why cabinet colleagues publicly censured the Treasury.
His comments come as ministers, including Water and Sanitation Minister Nomvula Mokonyane, and President Jacob Zuma have all hit out at the Treasury.
Gordhan has encouraged fellow ministers to present a united front on the document they all had a hand in crafting.
“When the division of revenue is decided ultimately by cabinet, it comes as no surprise to provinces and local government because they would have seen it coming — and would have been prepared for receiving it.
“And they influence it,” he said adding that, for the upcoming budget, he had personally engaged all the provinces’ executives.
Mokonyane accused National Treasury of being a stumbling block to development after it refused to approve a deviation from normal procurement policy in the sourcing of funding for the R14-billion Umzimvubu Dam project.
The Treasury’s decision not to make funds available for the construction of nuclear power stations, instead opting to allocate R200-million for a feasibility study, has been another source of tensions.
According to recent news reports, Zuma expressed his frustration with the Treasury at the ANC’s national executive committee lekgotla in January.
Gordhan said the process, which begins in June every year, was guided by legal prescripts.
Though complex and technical, it involves everyone from cabinet ministers, through a sub-committee chaired by Gordhan, and departhas ment technocrats to provincial executives and local government.
“It’s on behalf of the ministers’ committee and government that we will brief cabinet and say this is where we’re going and this is the framework we’re putting to you.”
The minister said his department for the first time published the set of guidelines sent out to all national departments last June in preparation for this budget.
The guidelines, available on the Treasury’s website, list rules of engagement for departments as they prepare their budget submissions.
“The guidelines were published in the interest of transparency,” Gordhan said. “People give the impression that many things happen in obscurity, so we thought to put it out there and people must know that we’ve now kick-started the budget.
“It’s about empowering the public to know the rules of the game.”
The minister also revealed that, for this year’s budget, departments were asked to cut their expenditure on administration by 1.5%.
A fine balance must be maintained between the overall levels of expenditure, the amount of taxation (tax burden) and borrowing, he said adding that many countries borrowed themselves into a debt trap that invited the International Monetary Fund, resulting in them losing their fiscal sovereignty.
He characterised this as another form of colonialism.
Borrowing came with an ethical and moral dilemma in “how much burden do we create for future generations”. “Many countries collapse because they borrow without thinking about the future.”
Gordhan said the negative narrative around ratings agencies did not help the situation. “The militant language outside swears at ratings agencies, but if you don’t keep your investment grade and don’t grow as an economy, then any investor will ask whether you can pay back.”
Many countries collapse because they borrow without thinking about the future