“Asifuni i-Gear” is still a popular rallying cry amongst Cosatu cadres. ANC secretary general, Kgalema Motlanthe, explains why the ANC chose to go the GEAR route.
What did the ANC find when it got into power?
We realised that we inherited a huge debt. Some said that the debt incurred by an illegitimate government should be ignored and disregarded. But when we scratched deeper we discovered that this debt was not owed to foreigners but to the public sector employees’ pension funds. It was money owed to our own people! The leadership of the ANC then decided that we can’t dishonour the debt because these are moneys belonging to our people.
Having taken the decision to honour the debt of R34 billion, the question still remained, where would (we get) the money to pay this debt and still meet the expectations of our people. This was 1994 when our people were still celebrating the fact that we had come to power.
What were the options that you had?
Many advised that we should go and borrow from the International Monetary Fund (IMF) and the World Bank (WB). But the leadership of the ANC took a decision that said ‘let’s look at the implications of the decision to borrow from these (institutions).’
Remember that at that time (1994) the ANC had been struggling for liberation for 82 years. So the question of just pawning things like that would have been a serious matter. That’s when the ANC took the decision that we won’t borrow from the WB and the IMF.
What factors influenced the ANC’s decision not to borrow from these international financial institutions?
Government always spends and for that you print money when running short of money. Some people do not understand that when you run the government you have to manage your finances as if you are managing your personal finances otherwise you end up with loan sharks.
The same applies to countries as well. Once indebted to the IMF and World Bank they will tell you at some point what to do when you are deep in debt.
That is what happened to Zimbabwe . Zanu-PF took over, they subsidised education, transport, health care, basic foodstuffs. After four years of being in office they had to borrow from the World Bank and the IMF because the expenditure side was not being supported by the revenue side. As they sank deeper and deeper into debt, the time arrived when the WB said to them, they must implement structural adjustment programmes (SAPs).
As soon as the subsidies were done away with, the first people to demonstrate in Zimbabwe were the university students. That is what we had to avoid here.
Why did government then introduce GEAR?
This debt remained staring us in the face and that’s where GEAR comes from. The leadership decided that we needed to craft a macro-economic policy that would enable us to tackle this debt without losing our independence so that once we tackled it, whatever resources that we generated could then go towards the Reconstruction and Development Programme (RDP).
What has government achieved through GEAR?
If somebody speaks of GEAR today it is irrelevant, because the debt is gone. It is now possible for treasury to say there is so much available for reconstruction. Internationally SA remains independent, it doesn’t matter whether it is at the World Trade Organisation (WTO), G8, in the United Nations (UN) or any international forum. SA speaks on the issues without any hindrance precisely because it is independent. Once you lose this independence, politically you begin to take instructions and speak on behalf of the donors. And this independence in political terms is very important.
We find that some municipalities owe the PIC money and whatever little resources come their way they have to service that debt. There is therefore no money available to do anything else. Because of GEAR we have now eliminated the debt and as a consequence of which, whatever we generate is available for the expansionary budget in the post-GEAR period.
The burden of debt is gone and the available resources can now be allocated for education, etc.
Motlanthe was speaking to Karl Cloete and Mdu Ntuli