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The National Treasury offices in Pretoria. Picture: RUSSELL ROBERTS
The National Treasury offices in Pretoria. Picture: RUSSELL ROBERTS

The National Treasury has embarked on borrowing that invites closer inspection, particularly in light of its recent loan agreements totalling $1.6bn from the World Bank, German government and African Development Bank.

This borrowing spree is not a standalone event but part of a consistent pattern observed over recent years. It is essential to understand the implications of these financial decisions, especially in the context of the country’s evolving political landscape and economic policy. The situation gains in complexity when considering that the ANC could lose its parliamentary majority in the 2024 general election.

During the presidency of Jacob Zuma, the Treasury faced significant challenges to its authority. The period was marked by a tug-of-war between the president’s ambitious spending plans and the Treasury’s fiscal caution. Zuma’s advocacy for substantial financial undertakings, such as funding free education and constructing a nuclear power station, met with resistance from the Treasury, which prioritised fiscal prudence. The tension culminated in the resignation of key officials such as Michael Sachs, then head of the budget office, indicating a profound internal crisis.

The extent of this conflict was laid bare at the Zondo state capture commission. Testimony from figures such as President Cyril Ramaphosa, former Treasury director-general Lungisa Fuzile and deputy director-general Ismail Momoniat not only highlighted the Treasury’s struggle to maintain its fiscal integrity but revealed the extent to which it was perceived to be under attack from Zuma. These revelations painted a clear picture of a pivotal institution grappling to uphold its foundational principles in the face of political pressure.

The borrowing approach of the Treasury echoes strategies from SA’s past, particularly resonating with insights from Barend du Plessis, the last apartheid-era finance minister. In a telling interview conducted in February 1999 by Padraig O’Malley, Du Plessis articulated a significant viewpoint on economic policy.

He said: “I would have liked fiscal and monetary policy to have been agreed to and locked into an assistance programme from the IMF, and possibly also some developmental projects from the World Bank, before the political negotiations started. I would have liked that because it would have taken a very contentious issue out of the political equation, leaving the negotiators to concentrate on politics.”

This candid admission reveals a strategic preference for establishing economic policies independently of political processes. O’Malley’s probing further confirmed that by the time the political parties signed off on a policy agreement sent to the IMF (involving $850m in loans with conditions to adopt neoliberal policies in the post-apartheid era), they in effect “fixed policy”. This approach, aimed at removing economic decision-making from the political fray, seems to be a tactic embraced by today’s Treasury, as illustrated by its recent borrowing patterns and the secretive conditions attached to these loans.

This borrowing strategy has deeper implications than mere fiscal prudence. With the ANC potentially losing its majority in the 2024 elections, the Treasury’s approach might be an attempt to cement its economic policies. This is evident in the secretive nature of conditions attached to loans, such as those for the just energy transition, which ostensibly aim to support environmental sustainability but also subtly pave the way for the privatisation of electricity generation. This transition is less about addressing climate change or promoting equality and more about introducing private players into the sector, a move that aligns with neoliberal ideologies.

Former finance minister Tito Mboweni’s influence in this context is crucial. While not overtly a proponent of right-wing neoliberal policies, a closer look at economic decisions and frameworks during his tenure reveals an entrenchment of such ideologies. The current borrowing pattern, while not directly attributed to him, resonates with  the neoliberal approach he initiated. By agreeing to loans with specific conditions the Treasury seems to be sidestepping the democratic process of economic policy-making.

This over-borrowing strategy limits the ability of future governments to shift towards more state-interventionist, Keynesian policies. It in effect sets a fiscal and monetary policy direction that could be challenging to reverse, regardless of the political party in power. This approach may ensure fiscal stability in a neoliberal sense, but at the cost of democratic engagement and much-needed flexibility in economic policy-making.

The implications of these financial commitments extend beyond the immediate fiscal impact. They signify a potential shift in SA’s economic policy to one that favours austerity and privatisation over state intervention and public welfare.

As the country inches closer to a pivotal election it is imperative to question the motivations and implications of the Treasury’s borrowing strategy. Is this a tactical move to entrench a particular economic framework that supports austerity and privatisation?

The answers to these questions are crucial for understanding the trajectory of SA’s economy and democracy. The borrowing decisions made today will have lasting effects on the nation’s future, shaping not only its fiscal policy but also its political and social landscape.

The Treasury’s borrowing pattern is a complex issue that requires careful analysis. It is not just about the numbers but about the underlying economic philosophies and political motivations.

The question remains: will these strategies lead to a more inclusive and sustainable economic policy, or will they entrench a framework that prioritises austerity and privatisation? The answer will have a significant effect on the future of SA’s economy and its democratic ethos.

• Dr Tshimomola is EFF senior researcher in the parliamentary caucus.

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