Manuel defends inflation targeting, but opens door to Alliance positions

By: Terence Creamer

Published: 21 Oct 08 - 17:00

Finance Minister Trevor Manuel strongly defended government's inflation-targeting policy on Tuesday, saying it provided a vital anchor in the context of financial market turmoil.

His remarks, which were made together with the release of the Medium Term Budget Policy Statement (MTBPS), followed only days after the ruling African National Congress' alliance partners met at an economic-policy summit, during which inflation targeting came in for some heavy criticism.

In his address to the National Assembly, Manuel argued that the moderation of inflation "must remain a central policy objective, particularly as we seek to expand investment and job creation under conditions of heightened business uncertainty".

SA healthcare receives a huge cash injection

Tamar Kahn

Science and Health Editor

CAPE TOWN — Finance Minister Trevor Manuel has allocated extra money for the immediate crisis posed by SA’s HIV/AIDS epidemic while not forgetting the long-term challenge of improving health infrastructure and retaining skilled staff in the public sector, the medium-term budget policy statement shows.

An extra R300m is allocated to the HIV/AIDS conditional grants this year. The money provides for the increased cost of the new AZT-nevirapine regimen for preventing mother to child transmission of HIV, which replaces a regimen based solely on nevirapine.

Extra funds were also needed to accommodate more patients than had been anticipated on the government’s free treatment programme, said the treasury’s director for health policy Mark Bletcher.

More than 500000 HIV patients had started treatment since the programme’s inception in 2004, 200000 of them in the past year, he said. The budget for HIV/AIDS conditional grants has been revised up R932m over the medium term, taking the total to R12,4bn.

The budget increases the provincial equitable share by R1bn in 2008-09 to pay for higher than anticipated implementation of new occupation-specific wage dispensation for nurses. The 10,5% increase in salaries negotiated in the bargaining chamber was significantly higher than the 7,5% increase provinces had budgeted for this year, said Bletcher.

Public service to receive huge wage boost

Wyndham Hartley

Parliamentary Editor

CAPE TOWN — The higher than budgeted public service salary increases will cost the provinces R3bn this year and will add a huge R23,2bn to the salary bill over the next three years, the medium-term budget policy statement revealed yesterday.

Not only were the provinces affected by the higher than anticipated increases, but every government department — particularly those with large staff components such as defence and the South African Police Service (SAPS) — had to have its budget topped up in the additional appropriation to meet these increased personnel costs.

The policy statement said that “at the time of tabling their budgets, provinces were asked to provide for salary adjustments of 7,5% in 2008-09, but actual increases of 10,5% were awarded. An amount of R3bn is included in the 2008-09 adjustments budget and R23,2bn is proposed for the next three years for the carry-through costs of higher salary increases and to provide for additional personnel costs in education and health.”

Defence has been given an extra R202m to cover the higher salary costs this year, while the justice department has been allocated R119m and the SAPS a whopping R668m.

All in all, the current transfers to the provinces will increase this year to R7,6bn, bringing the total allocation to R245,6bn for the current financial year.

This will rise by a further 10,8% each year, bringing the total allocation to provinces in the form of “equitable share” to R333,8bn in 2011-12.

Manuel Says South Africa Mining at `Risk' From Crisis

By Nasreen Seria

Oct. 22 (Bloomberg) -- South African Finance Minister Trevor Manuel said the country's mining industry is at ``risk'' because of the fallout from the global financial crisis.

``Demand is likely to fall and prices will be low,'' Manuel said in an interview with Johannesburg-based South African Broadcasting Corp. today.

The price of platinum, South Africa's biggest export, has plunged 58 percent in the past six months, dropping as low as $838.10 an ounce in London today. The slump in commodity prices has undermined the rand, which fell below 11 to the dollar for the first time since April 2002 today.

South Africa's mining output declined 6.2 percent and non- gold production fell 3.5 percent in August from a year ago, Pretoria-based Statistics South Africa said on Oct. 9. A drop in mining production may lower corporate profits and tax earnings next year, Manuel said in his mid-term budget yesterday. The government is forecasting a budget deficit of 1.6 percent of gross domestic product in the year beginning April 1, compared with a February forecast of a 0.6 percent surplus.

South African Rand Rises After Manuel Says Ready to Serve Again

By Lukanyo Mnyanda

Sept. 24 (Bloomberg) -- South Africa's rand rose for the first day in three after former Finance Minister Trevor Manuel said he was ready to go back to his job in a new government.

The currency had its biggest drop in a week yesterday after Manuel, along with Deputy President Phumzile Mlambo-Ngcuka and 10 other ministers quit the government following the ouster of President Thabo Mbeki over the weekend. The resignations fueled concern the country's new leaders will boost spending and allow record inflation to accelerate.

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