Gordhan gives left tacit nod

Cape Town - Management of the South African fiscus may be subject to economics rather than politics as stated earlier on Tuesday by Pravin Gordhan, but the finance minister also gave a nod to the left claiming the country had to rethink its economic model.

Commenting in the Medium-Term Budget Policy Statement, Gordhan said pressure from the left in the ANC, trade federation Cosatu and the SA Communist Party was less important than the pragmatics of economics when guiding the fiscus.

However, growth had to become more inclusive and job-creating, he said, adding that this would require specific reforms that the cabinet's economic cluster would explore in detail.

"We have to explore options for promoting the development of our mining industry, lowering costs in telecommunications and transport, expanding tourism, enhancing technology and developing further trade opportunities, drawing where appropriate on international experience," he said.

"We know that our growth path has to include enhancement of the labour-absorbing capacity of the economy," said Gordhan. "Employment brings the best prospects for permanent reductions in poverty," he said.

Governments had to take the hassle factor out of doing business so that businesses could help drive the job creation process, he said.

These comments echo the findings of a report tabled by the Commission on Growth and Development, which looked at 13 countries that had succeeded in expanding national output and incomes by over 7% a year for at least 25 years.

According to the report, factors these successful economies had in common were that they fully exploited the world economy. "They imported what the rest of the world knew, and exported what it wanted," said Gordhan.

They also maintained macro-economic stability by focusing on keeping inflation low and budget deficits moderate, mustering high rates of saving and investment to finance economic growth.

Other steps were to allow markets to allocate resources, including in economic downturns, and to provide appropriate training and skills development that enabled people to move from declining to rising sectors.

Committed, credible and capable governments which held public agencies accountable and sought to achieve publicly-articulated long-term targets was another characteristic pinpointed by the report.

- Fin24.com