Hands off the Treasury, civil society tells Zuma
Civil society organisations have added their voice in condemning the perceived interference in the running of the Treasury, which had established a reputation for being among SA’s well-managed institutions.
The concerns followed the sudden departure of Michael Sachs as head of the budget last week, and several other key officials before him, which inevitably raised questions about stability at the Treasury.
In this regard, Section 27 and several other pressure groups on Friday urged Parliament to investigate the circumstances around the resignation of the key officials at the Finance Department and to monitor the filling of existing vacant positions.
Earlier in 2017 Lungile Fuzile resigned as head of the Treasury shortly after Pravin Gordhan was fired as finance minister in a controversial Cabinet reshuffle.
The pressure groups also called on lawmakers to show support for credible and sustainable budget processes, including using their powers under the Money Bills Amendment Act to reject any new proposals that sought to undermine budgetary checks and balances.
Speculation was rife last week that President Jacob Zuma wanted to bypass the budgetary process, so he could cover students’ demands for a free higher education.
The Treasury has projected a R50.8bn budget deficit in the current 2017/18 financial year, rising to a cumulative R209bn by 2020/21.
"Diverting budget allocations outside of the established processes opens the gate for arbitrary and irregular reallocations in the future," the pressure groups said in a joint statement.
"The resulting policy uncertainty, with its negative impact on the economy and fiscal framework, alongside actual reallocation, put the sustainability of social spending at risk."
Markets have increasingly been sensitive to political developments, with the rand and local bonds dropping fairly sharply when the news of Sachs’ resignation came to light last week, before subsequently recovering.
The rand weakened to a low of R14.58/$, its worst level in just over a year, before pulling back to R13.97/$ by Sunday. The yield on the benchmark R186 bond jumped to highs of 9.55%, before settling back to 9.39%.
"The persistent attempts by the head of state to buy time in office were the obvious rationale behind the rumours of heavily subsidised education," said Ashley Dickinson, the head of fixed income dealing at Sasfin Wealth.
"The net result of his heavy-handedness was that we lost another capable asset, after the head of the budget division at Treasury handed in his ticket, and this action caused the rand and bonds to post material losses."
The developments come at a time when ratings agencies are finalising scheduled reviews of the country’s creditworthiness. Moody’s Investors Service and S&P Global Ratings are due to release their verdicts on Friday.
SA could lose its last vestiges of investment grade status if the two companies downgrade its crucial debt that is denominated in rand.