Cape Town — The rand has breached R14.50/$ yesterday as news filtered through of President Jacob Zuma’s seemingly imminent plan to push through free higher education.
The rand, which opened at R14.40 to the US dollar yesterday after hitting R14.43/$ in early Asian trade, spiked to R14.50 against the greenback by 10:45 amid reports of the Presidency’s interference at National Treasury to push through Zuma’s fee plan.
By 11:15 the local unit has spiked to R14.51 to the US currency, a 16-month low after reports that Michael Sachs, a deputy director general who headed up the budget office, quit last week.
Fin24 has obtained independent confirmation from two sources close to Treasury that the Treasury veteran of ten years resigned as the issue of free higher education was steamrolled by Zuma. “Michael didn’t necessarily oppose the idea of free education, but he wouldn’t stand for the interference in the budget process,” a source said.
Zuma’s plan to find R40bn within the constrained budget to fund a free-education policy for families who earn less than R350 000 comes amid changes to the budget process, where National Treasury’s role in keeping a lid on government spending and finding the best ways to grow the economy has taken a back seat to the Presidential Fiscal Committee (PFC).
Sachs and other senior officials were apparently unable to go along with the new budget process to cut R40bn from the current medium-term budget policy statement to fund the proposal, Business Day reported yesterday.
RMB currency strategist John Cairns said the threat that free higher education will be announced soon will continue to weigh on the market “today (and multi-week), but we could see some pullback” as data and events risks are moderate. “Fears that President Zuma is set to announce free higher education will continue to weigh, particularly as almost every broadsheet in the country read the story on the front page over the weekend.
“The President’s statement on the issue has only clarified that he did not want — as alleged in the Sunday media — to make the announcement during his State of the Nation Address, and adds nothing on his current thinking or planned actions,” Cairns told investors yesterday. — Fin24