KEY POSTING ANALYSIS
Highly regarded Duncan Pieterse appointed as DG of National Treasury while fiscal cliff looms
Duncan Pieterse has been appointed as the new Director-General of the National Treasury. Unlike many government departments, the Treasury and the Finance Ministry are mostly focused on merit rather than the deployment of questionable cadres. The new DG will have his work cut out for him in the face of a barely growing economy that bodes ill for revenue collection and debt reduction.
Duncan Pieterse brings a decade of experience in the National Treasury to a job that is among the toughest in government. Currently the Deputy Director-General of Asset and Liability Management (ALM) – also a difficult position where he impressed – the Harvard PhD assumes the role at the beginning of September.
“I believe Duncan has more than enough experience, expertise and chutzpah to make a success of this new challenge,” Finance Minister Enoch Godongwana said in a statement.
“Chutzpah” suggests someone has the guts to do tough things, and one analyst who spoke to Business Maverick noted Pieterse’s efforts to turn the ALM ship around before it hit an iceberg.
“He moved to ALM originally in part because of how weak it was under two previous leaders of the division, which had left it listless from 2014 to 2021. Duncan started turning it around capacity-wise, training and reorganising people, but it was not a complete task,” the analyst said.
“But they still need a strong head of ALM, given the funding cliff-edge we are at. ALM has a problem. There are no obvious internal candidates to take over.”
South Africa is walking a tough fiscal tightrope and the Treasury will need someone to walk that fine line.
“The fiscal deficit has continued to narrow, reaching 4.2% of GDP in FY2022/23, from 4.8% in FY2021/22, thanks to buoyant revenue and expenditure restraint,” the International Monetary Fund warned in June.
“Despite this improvement, the government debt-to-GDP ratio is estimated to have increased to 70%.”
The economy may have fared better than expected in the second quarter of this year (see related story on mining and manufacturing), but the latest growth forecasts overall for 2023 remain in the region of 0.3%. That hardly bodes well for revenue collection.
The windfall from revenue from the mining sector has cooled as commodity prices for the most part have fallen, which raises the prospect of a looming “fiscal cliff” ahead of an election year when purse strings can loosen.
Still, the incoming DG is highly regarded in the markets, and Godongwana – who does not carry the outdated ideological baggage of some of his Cabinet colleagues – is focused on economic growth. The finance minister understands markets and wants the economy to grow, and it seems likely that he would have gone to bat for a DG appointment in sync with his broad views.
And Treasury, beyond a few wobbles in the Zuma era, is generally known for placing merit above cadre deployment. This economy would be far more shambolic if that was not the case, and would probably have already tipped over the fiscal cliff.
The arduous task that Pieterse faces is to help pull it back further from the precipice. Some “chutzpah” may indeed be needed. DM