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Fuzile: Discipline is right thing to do

May 14 2017 06:29
Johan Eybers

Fiscal discipline is not about keeping ratings agencies happy but is the right thing to do, outgoing National Treasury director-general Lungisa Fuzile said this week.

Speaking on the eve of his farewell appearance in Parliament, Fuzile said adherence to fiscal discipline enabled the country to determine its own policies.

“If fiscal discipline is deviated from, then the International Monetary Fund will eventually prescribe it to government … We have to ensure that we apply fiscal discipline and that we are not compelled to do it from outside,” said Fuzile.

He was speaking at a symposium at the University of Cape Town’s business school on Tuesday night.

Fuzile also appeared to contradict Finance Minister Malusi Gigaba’s statement that there were a variety of reasons for the country’s credit rating having been downgraded to “junk” status.

“Recently, things were looking good for South Africa in a way that we haven’t really seen in recent history.

"There was an uptick in commodity prices, capital flow to emerging markets was on the rise, the exchange rate of the rand was positive and industrial behaviour had stabilised.

“Who is in what position is important, but what those people do is just as important,” he said.

Fuzile will bid farewell to National Treasury tomorrow, after working there for 20 years.

His comments came just a few hours after Gigaba implied in Parliament that President Jacob Zuma’s Cabinet reshuffle had nothing to do with the first downgrade by S&P Global.

Gimmick

“The first downgrade had already taken place before the Cabinet reshuffle. When we arrived at the office [the morning after] the reshuffle, the decision had already been made,” Gigaba said.

He further argued that the economy had not been growing since 2008 and that there were various reasons for the downgrade.

Fuzile was part of the Treasury team who tried to woo investors and credit ratings agencies over the past few years as part of efforts to keep South Africa from being downgraded.

Turning to land reform, Fuzile said “it must be regarded as a failure” when land was transferred and used less productively than it had been in the past.

“The acquisition of agricultural land has to go hand-in-hand with a programme to develop skills,” he said.

According to Fuzile, last month’s court judgment – which found that part of the process followed by government in acquiring nuclear power was unconstitutional – was further “proof that government was not complying with its constitutional obligations”.

He described radical economic transformation as a gimmick.

“The only way that economic transformation of any sort can take place is if there is economic growth paired with job creation,” he said.

“We all agree that economic transformation is important, but people feel uncomfortable when something is branded as radical.”


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