‘Treasury in chaos, rating agencies circling’: DA’s Maynier on Zuma’s budget putsch
The determined attempt by President Jacob Zuma to remove Treasury from the budget process had resulted in chaos, Democratic Alliance finance spokesman David Maynier said on Tuesday.
Maynier’s comments were made during the debate on the Division of Revenue Amendment Bill in the National Assembly.
A sign of this chaos was the shock resignation of the head of the Treasury’s budget office, Michael Sachs — who, Maynier said, was one of the most experienced and one of the most capable senior officials in Treasury.
"The fact is that his resignation is a huge blow to National Treasury and confirms our fears that decision-making about budget priorities, and the budget itself, has now been centralised under President Jacob Zuma," Maynier said.
Despite the fact that the Constitution required that "budgetary processes" to promote transparency, accountability and sound financial management, there was now a situation in which:
• a "presidential fiscal committee" made decisions about the budget, which undermines the Minister’s Committee on the Budget;
• a "mandate paper" set out budget priorities in terms of a new budget prioritisation framework. Compiled by the Department of Planning, Monitoring and Evaluation this undermines Treasury; and
• a plan hatched outside of Treasury, with the support of Zuma, has proposed a R40bn plan for higher education funding.
"What this means in practice is that in the middle of a ‘fiscal crisis’ — which Michael Sachs himself described as the most challenging since the global financial crisis — decision-making on the budget has been plunged into chaos," Maynier said.
"We have to face the fact that National Treasury is being ‘defanged’ and reduced to ‘bookkeepers’ with declining influence over budget priorities, and the budget itself under Zuma.
"Things have got so bad that we are now not even sure whether government has abandoned fiscal consolidation, and its central fiscal objective, which is to stabilise national debt, in favour of a populist ‘spend now, pay later’ fiscal policy under President Jacob Zuma.
"Whatever the case, we can be sure that the ratings agencies, which are circling us like sharks, will have taken note and the probability of further ratings downgrades to junk status is greater today than it was the day before yesterday."