The ANC has instructed its economic transformation sub-committee to keep Luthuli House abreast on National Treasury austerity measures and what is being done to stimulate the economy.
The party's national executive committee (NEC) meeting last weekend received a report from finance minister Enoch Godongwana and NEC economic sub-committee head Mmamoloko Kubayi on measures that need to be taken to cut the fat.
But the NEC is said to have asked Kubayi’s committee to compile a detailed report on the situation and what can be done to avert cuts that could undermine government spending.
“We said let them bring the facts,” said an NEC member who asked not to be named.
Kubayi confirmed that she and Godongwana made a presentation to the NEC.
“There was an acknowledgment that there's a revenue gap. Are we able to find areas of savings so [we] don't compromise the fiscus?
“What the NEC said was there needs to be a broader conversation on macroeconomic issues. The economic transformation subcommittee will compile a report and present on this at the next NEC.”
The Treasury has proposed reining in runaway government spending, warning of “unprecedented challenges” and raising a red flag over South Africa's deteriorating public finances.
Drastic steps include a sharp reduction in spending, a freeze on advertising new appointments and a call on departments to fund increases for public servants “within departmental baselines”.
The Treasury says the cuts are needed to sustain the R350 social relief of distress grant, but the proposals have met resistance from the ANC and its allies.
ANC secretary-general Fikile Mbalula said the NEC received a “detailed account of the proposed cost containment measures by the National Treasury”.
“The NEC directed that an important balance between prudent fiscal management and delivering public goods and services should be struck. Importantly the NEC emphasised that what is being undertaken are cost containment measures and not austerity.
“The ANC remains committed to a fiscal management framework advanced through a developmental state that is pro-poor, protects the living wage for public sector workers and uses infrastructure development to create more work opportunities,” Mbalula said.
The ANC remains committed to a fiscal management framework advanced through a developmental state that is pro-poor, protects the living wage for public sector workers and uses infrastructure development to create more work opportunities,
— Fikile Mbalula
Kubayi told the Sunday Times the NEC expects a comprehensive report on how grow the economy to improve state revenue.
“The major issues are around the logistics challenge. We know the network industries [including rail, telecoms and energy] are critical, but they are enablers, not drivers of growth. Manufacturing is a driver of growth. It grew slightly but this was mainly driven by solar panels.
“What the NEC members asked was: ‘Can we make sure it's an inclusive economy?’ The finance minister will be delivering the MTBPS (medium term budget policy statement), so he wasn't gong to give a full presentation of it to the NEC.
“But we all agree we need to grow the economy, and we must support National Treasury efforts to protect the fiscus and not put it into risk.”
Earlier this month the SACP’s central committee expressed its opposition to austerity measures.
“Austerity involves cutting government service delivery and development expenditure, including redistributive programmes, and withdrawing from advancing any real economic stimulus,” the party said.
It proposed that “decisive measures” be taken to deal with the failure by government to deliver services and goods to citizens.
“The National Treasury needs to find new money to fund the public service bargaining wage agreement. The government [needs] to draw down on funds the Reserve Banks’ Gold & Foreign Exchange Contingency Reserve Account owes to it, to fund the expected fiscal shortfall.
“If the funds are reserved for storms and if we are indeed on the edge of a fiscal cliff, as the National Treasury claims, then this is the storm.”
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