NEWS

Ratings Agencies Stall Zuma's Free Higher Education Plan

Treasury has halted the plan in attempt to stave off another downgrade.

27/11/2017 07:24 SAST | Updated 27/11/2017 07:24 SAST
Siphiwe Sibeko / Reuters
President Jacob Zuma.

Threats of ratings agency downgrades appear to have pushed Treasury to revisit President Jacob Zuma's mooted free education plot, Business Day reported on Monday. Treasury's promise to ratings agencies that it would do this, and that it would implement a range of measures to address the budget shortfall appear to have convinced one ratings agency to hold off on downgrading SA.

Moody's reportedly put South Africa (SA) on review for a downgrade and will make its final decision after the February budget, while Fitch, which downgraded SA to junk status in April, reportedly affirmed its decision.

But S&P downgraded SA's local currency to junk last week on the basis that measures to tighten the budget could make SA's growth prospects even worse.

Business Day reported that Treasury, in response to the S&P and Moody's decisions, said there were moves to improve access to higher education, but that the president had been directed to implement these in a fiscally responsible way.

Treasury reportedly said: "Given the nation's financial constraints, this necessarily implies a phased approach focusing on the neediest students."

Earlier in November, Times Live reported that Zuma planned to announce free tertiary education across the board, on the advice of his new adviser, who was formerly engaged to his daughter. Treasury had reportedly been instructed to find R40-billion for the free education plan, throwing Finance Minister Malusi Gigaba's medium-term budget out of the water and flying in the face of the Heher Commission's recommendations.

Zuma's plan outraged Treasury officials, who had been internationally accredited for their budgeting skills. Treasury's head of budgeting Michael Sachs resigned as a result.

Sachs has joined the Gauteng department of health, News24 reported at the weekend.

The Gauteng provincial government reportedly hired Sachs to set up a team to help it recover after being hit by several crises, including the Life Esidimeni tragedy.