The Treasury seems to have been left on its own to figure out how to tackle the economic earthquake
The writer argues that the presidential economic advisory council, seen here with President Cyril Ramaphosa at its launch in 2019, must be seen to be proactive in the wake of the economic devastation caused by Covid-19. Picture: GCIS/ELMOND JIYANE
What have the Treasury, the cabinet , the Reserve Bank, other economists and the markets overlooked in determining how the Covid-19 economy should be managed? The supplementary budget’s warnings of a future sovereign risk debt crisis for SA are compelling, as are the economic policy steps needed to avert it. An old proverb says that “heavenly vengeance pursues a crime slowly but nevertheless catches up with it in the end.
It may be that structures such as the PEAC have indeed been consulted informally behind the scenes. “Doing good by stealth” has its merits, but it is inappropriate for these times. The PEAC was specifically created nearly a year ago to “serve as a forum for in-depth and structured discussion on emerging global and domestic developments, economic and development policies ... and ensuring greater coherence and consistency in the implementation of economic policy”.
Public finance is one of those subjects that sits on the border between economics and politics — even more so given SA’s febrile socioeconomic climate, now aggravated by Covid-19. Political factionalism in the governing ANC complicates the task of finding practical solutions to pressing socioeconomic challenges. The danger of strongly ideologically driven economic policy is that it turns practical matters into issues of principle.
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