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Mbeki: Gear programme was meant to save SA from debt

Mbeki says the programme was brought in when it was obvious SA would spend more money servicing debt.

Former South African President Thabo Mbeki. Picture: Facebook.
former President Thabo Mbeki,Thabo Mbeki Foundation,Thabo Mbekis government,Thabo Mbeki Leadership Institute
Local Politics Business

JOHANNESBURG - Former President Thabo Mbeki says his government instituted the Growth, Employment and Redistribution (Gear) budget programme to ensure South Africa did not fall into a debt trap that would force the country to ask for help from the International Monetary Fund (IMF).

The Thabo Mbeki Foundation has published a response by Mbeki to a critique of Gear, which it says constitutes today’s newsletter from the former president.

When Mbeki was president, his economic policies were strongly criticised by the left of the African National Congress, trade unions and the South African Communist Party.

They claimed the policies were neo-liberal and would result in government cutting back on social services and the rich getting richer.

But in his newsletter today, the former president says that when the programme was brought in when the budget deficit had reached almost eight percent of gross domestic product (GDP) and it was obvious the country would arrive at the point where it would have spent a lot of money on servicing its debt.

He also says part of the left critique of Gear focused on the reduction of the budget deficit before; he quotes at length from Karl Marx’s Das Kapital.

Marx explains how banks were able to create debt and that public debt becomes a powerful lever of primitive accumulation.

Mbeki then quotes another writer who said creating debt for workers was the best way to make them submissive and industrious.

He says it seemed very strange that some people on the political left wanted to create even larger budget deficits that would lead to the growth of the national debt.

Mbeki appears to be making the point that running a high national deficit to fund more social services for poor South Africans would not have been in the country’s best interest in the longer run.

(Edited by Masechaba Sefularo)

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