Resignations by longtime employees at National Treasury indicate a clear crisis at the keeper of the country’s purse, with senior staff noticing “a very different direction” on monetary decisions.
Treasury budget chief Michael Sachs has resigned – another in a long line of resignations by top Treasury people.
Sachs quit following a reported dispute about President Jacob Zuma’s meddling in plans for free tertiary education and which allegedly saw finance officials told to find R40 billion in the budget for the plan.
Sachs’ resignation and weekend news reports on a free education plan saw the rand plummet yesterday.
Political analysts said it was expected with the state capture “cloud that has descended upon South African society”.
Analyst Somadoda Fikeni said any decision involving Zuma and the coffers would be looked at with distrust, following the recent #GuptaLeak e-mails, as well as previous public protector Thuli Madonsela’s State of Capture report.
“Therefore any decision taken by the presidency and government in many ways suffer from a legitimacy crisis.”
Be it for good intentions or not, added Fikeni, the fundamental issue is that “we no longer trust” what is being done.
“Many people have left their jobs suddenly and later on come to testify on what was actually happening … sometimes a year later. The ratings agencies also will take a very dim view of what is happening currently,” said Fikeni.
“With the legitimacy crisis in South Africa, anything trying to consolidate the president’s power will be seen with great suspicion.”
He pointed to others senior staff who left Treasury this year, including former deputy director-general Andrew Donaldson and former director-general Lungisa Fuzile. They had controlled resources and access to it, said Fikeni.
“And this came at the time when the economy is so fragile.”
For as long as there is the perception that populist decisions for political reasons are being made at Treasury, financial markets would react, he added.
According to analyst Ralph Mathekga, Sachs’ resignation was of great concern – and the question is: who is next?
“This is someone who I think has realised the president’s policies to undo fiscal austerity measures, which has been sustained over a period of time.
“It’s not only Michael Sachs … Donaldson is also gone, Fuzile is gone… credible people within Treasury who have incredible combined years of experience are gone.
“Sachs, who was part of the Budget office, would rightly have been concerned there was an intention to provide free education. How do you go about doing that? It just doesn’t pass the test of any commitment towards fiscal austerity,” Mathekga said.
“These are senior people in Treasury who understand inflation and make sure we do not excessively overspend.
“This shows that Treasury is going in a different direction – and it’s not in the direction those who have left have been associated with.
“I wonder who is going to be next?” Mathekga predicted the morale would be very low in Treasury, which has to prepare the budget in a few months.
“They should be ready. But if the staff are going it’s a crisis. How do you put together the budget? Does it mean the budget won’t be prepared in line with the normal procedures?
“Where is the budget moving? That is the concern.”
Finance Minister Malusi Gigaba said he was “saddened” by Sachs’ departure and thanked him for his “excellent service and strong commitment”.
“The director-general and I are aware of protecting the integrity and transparency of the budget system and process, and ensure that all tax and expenditure decision processes continue to be run by the Treasury and minister of finance, and continues with the consultative process introduced by the first democratic government,” he said. – email@example.com