Patel announces his panel

Economic Development Minister Ebrahim Patel has appointed a panel of advisers packed with left-leaning opponents of former finance minister Trevor Manuel's hardline economics - including renowned Nobel laureate Joseph Stiglitz. 

Patel's panel could be expected to recommend lower interest rates and, possibly, state intervention to manage the foreign exchange value of the rand.

Manuel has yet to choose 20 members from among more than 1000 nominations for a seat on the statutory National Planning Commission he has been appointed to head.

Patel has already taken over management of the response to the global economic slowdown, the Competition Commission and the Industrial Development Corporation.

Patel said his panel would include Stiglitz, Cosatu economist Chris Malikane from Wits University, former Cosatu economist Neva Makgetla, who is now the lead economist in the development planning division of the Development Bank of Southern Africa, and Investec Bank strategist Michael Power.

All have extensively criticised inflation targeting or other planks of the strategy Manuel used to establish South Africa's international reputation for fiscal prudence and macro-economic stability.


Most economists credit Manuel's policies with South Africa's relatively mild recession in the face of last year's global slowdown.

But they have become the focus of lobbying from the left wing of the ANC, SACP and Cosatu alliance, who blame Manuel for slow job creation and less than stellar growth.

Patel said his department was "created to address a gap in government's economic policy-making, planning and coordination machinery so that, working together with other parts of government, we can have better economic and employment outcomes."

Nedbank's chief economist, Dennis Dykes, said the government appeared to be implementing a two-track economic policy with no clear indication of how the two new economic ministries - Patel's economic development department and Manuel's National Planning Commission - would co-ordinate their work.

Patel's team includes Standard Bank economist Goolam Ballim, whom most commentators said would represent the economic mainstream.

It also includes the Human Sciences Research Council's Olive Shisana, Industrial Development Corporation CEO Geoffrey Qhena, Competition Commission chief economist Simon Roberts, as well as Haroon Bhorat, a sociologist at the University of Cape Town who specialises in the study of poverty.

However, Stiglitz was seen as the most significant recruit.

Visiting South Africa last year, Stiglitz, who won the Nobel prize for economics in 2001, told reporters: "I'd be very strongly opposed to rigid inflation targeting in all countries.

"I think the [global] crisis is in part a result of central bankers focusing excessively on inflation.

"It has been a really costly mistake [but] most governments have by now moved to a more flexible policy. Most central banks have woken up that they made a mistake and that you need to look at financial stability."

Finance Minister Pravin Gordhan disappointed the SACP and Cosatu in his Budget last month with a strong endorsement of inflation targeting and the independence of the Reserve Bank. He dismissed calls for intervention to stabilise or to weaken the rand.

He is likely now to face opposition from Patel with backing from the new panel.

Patel said his team would produce 10 policy documents on growth and employment issues in the next year, looking at both macro-economic issues, which are traditionally the domain of the finance ministry, and micro-economic issues, previously handled by the department of trade and industry.

Source: Times LIVE