National Treasury has been hit by the sudden resignation of long-time budget head, Michael Sachs. According to Fin24, sources close to Treasury said the deputy director-general, who headed up the budget office, quit last week over interference by the Presidency.
The matter of free higher education that was to be implemented by President Jacob Zuma had reportedly pushed Sachs into resigning.
"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 was to find R40bn within the budget to fund a free-education policy for families who earn less than R350,000, which interferes with the budget.
This has meant 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).
Sygnia CEO Magda Wierzycka believes the PFC -- which comprises a much smaller committee -- has removed Treasury's crucial fiscal oversight of the budget.
"It is no longer a function of National Treasury. That function has been outsourced to Zuma and that is absolutely terrifying," she said at the Cape Town Press Club in October.
Sachs and other senior officials were apparently unable to go along with the new budget process to cut R40bn, Business Day reported on Monday. The plan --0 which has been unconfirmed by the Presidency -- has put the rand under increasing pressure.
"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," Rand Merchant Bank analyst John Cairns told investors on Monday.
"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.
"If the president does plan to announce free higher education, then it would make sense to do this after the November 24 rating reviews, but before the ANC National Conference, implying late November or early December is a major period of risk. Rumours will continue in the interim.
"All South African markets are feeling the pressure. The sovereign CDS, in particular, has come under pressure and is now trading at levels that fully price another rating downgrade."