Lay off criticising Treasury and ratings agencies, says Gordhan

Finance Minister Pravin Gordhan has warned against the growing culture of political indiscipline among cabinet colleagues who publicly criticise the National Treasury for not allocating them enough money.

In an exclusive interview with the Sunday Times ahead of this week's budget announcement, Gordhan was at pains to explain that the process of allocating funds to government programmes was a transparent and inclusive one.

He said he did not understand why cabinet colleagues publicly censured the Treasury.

His comments come as several ministers, including Water and Sanitation Minister Nomvula Mokonyane and President Jacob Zuma, have hit out at his department.

Gordhan has encouraged fellow ministers to present a united front on the document they all had a hand in crafting.

story_article_left1

"When the division of revenue is decided ultimately by cabinet, it comes as no surprise to provinces and local government because they would have seen it coming and would have been prepared for receiving it. And they influence it," he said, adding that for the upcoming budget he had personally engaged all the provinces' executives.

Mokonyane accused the Treasury of being a stumbling block to development after it refused to approve a deviation from normal procurement policy in the sourcing of funding for the R14-billion Mzimvubu Dam project.

The Treasury's decision not to make funds available for the construction of nuclear power stations, instead opting to allocate R200-million for a feasibility study, has been another source of tension.

According to recent news reports, Zuma expressed his frustration with the Treasury at the ANC's national executive committee lekgotla in January.

Gordhan explained that the budget process, which begins every year in June, was guided by legal prescripts that set out standards for transparency and engagement.

Though complex and technical, it involves cabinet ministers, through a subcommittee chaired by Gordhan, department technocrats, provincial executives and local government.

"It's on behalf of the ministers' committee and government that we will brief cabinet and say this is where we're going and this is the framework we're putting to you."

block_quotes_start People give the impression that many things happen in obscurity, so we thought to put it out there and people must know that we've now kick-started the budget block_quotes_end

The minister said that for the first time his department had published the set of guidelines sent out to all national departments last June in preparation for this budget.

The guidelines, which are available on the Treasury's website, list rules of engagement for departments as they prepare their budget submission. "The guidelines were published in the interest of transparency," Gordhan said.

"People give the impression that many things happen in obscurity, so we thought to put it out there and people must know that we've now kick-started the budget.

"It's about empowering the public to know the rules of the game."

The minister also revealed that for this year's budget, departments were asked to cut their expenditure on administration by 1.5%.

In working out his R1.14-trillion budget, he had to look carefully at South Africa's borrowing to supplement revenue.

story_article_right2

"The balance of deciding how much will be taken from tax and how much will be borrowed is a very important fiscal policy decision because the gap between these two manifests in a deficit, which is an indicator that is exceedingly important in fiscal management.

"You're actually juggling three balls in the air. The one is we said this year we're going to raise R28-billion in tax, the second is managing expenditure, so if you're not growing the revenue isn't coming in. You've got to manage expenditure, and the third is the borrowing ball."

Borrowing came with an ethical and moral dilemma in "how much burden do we create for future generations", he said.

"Many countries collapse because they borrow without thinking about the future. It's the reasons for borrowing that matters."

Gordhan said the negative narrative around ratings agencies did not help the situation. "The militant language outside swears at ratings agencies, but if you don't keep your investment grade and don't grow as an economy, then any investor will ask whether you can pay back."