All this with elections looming.
Newly installed President Kgalema Motlanthe sounds confident he can walk this ideological high wire, promising in his first address to the nation this week that "we will remain true to the (economic) course that we have set" even as he outlined a host of social spending measures.
Some economists say South Africa can indeed afford to spend millions more on job creation, education and health, largely thanks to a cushion created by the pro-business policies of recently ousted president Thabo Mbeki.
Mbeki and his respected Finance Minister Trevor Manuel, who was reappointed by Motlanthe, pursued free market policies that resulted in a healthy 5 percent annual growth since 2004.
Mbeki and Manuel expected the new wealth to trickle down. Instead, a small black elite has been enriched particularly by government black-empowerment programs, joining the many wealthy whites who continue to control the private sector of South Africa's mining and agriculture-based economy. Meanwhile, the gap between rich and poor has grown.
Mbeki's critics say wealth redistribution must come before growth, especially given the legacy of an economy distorted by the policies of racist white rule designed to keep blacks down.
Mbeki stands accused of coddling the white business leaders who grew rich on the backs of cheap black labor under apartheid and at the expense of the poor masses that form the bedrock of his party.
Even Manuel admitted, days before Mbeki's fall, that "the harsh and ugly truth that confronts us is that ... the everyday lives of many of our people remain as uninspired and as filled with despair."
Under Mbeki, fiscal surpluses went unspent while millions of South Africans battled to survive on the equivalent of one or two US dollars a day.
An overachieving tax collection agency has left the government with unbudgeted gains of up to 30 billion rand a year that went unspent, according to economist Michael Samson, director of research at the independent Economic Policy Research Institute in Cape Town.
Maintaining a fiscal surplus amid the poverty could be "a little too conservative," Samson says, arguing South Africa can afford a deficit of up to 3 percent of gross domestic product — still considered conservative by the European Union, for example. Together with the 1 percent surplus forecast, that would comfortably provide the 50 billion or 60 billion rand (US$6.3 billion to 7.5 billion) needed for social priorities.
Reserve Bank figures suggest 4 percent of GDP this year would total 90 billion rand (US$11.25 billion), Samson says.
Despite this positive scenario, he cautions there will be "a difference of opinion as to how far you can go through resource transformation without compromising the macro-economic stability" that Motlanthe promises.
Many say it's impossible.
Karima Brown, the political editor of Business Day newspaper, writes: "One myth, soon to be debunked, is that there will be no policy changes after the seismic shift in the ANC and government in the aftermath of Polokwane and last week's political drama."
Corruption-tainted populist Jacob Zuma toppled Mbeki as leader of the governing African National Congress during a party meeting in Polokwane in December.
ANC members at Polokwane demanded the government give priority to past promises — now repeated by Motlanthe — to halve unemployment and poverty within 10 years; deliver proper health care to reduce unnecessary deaths including among 5.4 million people infected with the AIDS virus; drastically improve education and low-housing programs; and reduce serious crime in a country where 50 people are killed daily.
A failure to address those issues while the country's economy boomed was one of the death blows for Mbeki, whom the ANC forced to resign on Sept. 21.
Zuma is expected to become president after elections to be held by April, on the strength of the party's overwhelming national support though deep divisions linked to Mbeki's ouster could split the party.
Zuma has been on the campaign trail, assuring voters that "in seeking much-needed foreign and domestic investments, we will not compromise the rights of workers and the poor."
Zuma is backed by the ANC's left-leaning allies, the South African Communist Party and the powerful Congress of South African Trade Unions. As Motlanthe took the reins of government this week, both have come out with demands. The Communists want a "political council" of the three organizations to decide on appointments to the Cabinet; labor wants the government to set up a state-owned mine.
Such demands raise concerns about how much Zuma owes to radicals who helped him topple Mbeki.
The ANC, which celebrates its 100th anniversary in four years and has 620,000 card-carrying members, won 2004 elections with nearly 70 percent of votes. The trade union congress has 1.8 million paid up members and the Communists say they have more than 70,000 members among South Africa's 48 million people.
With the leftists in the ascent, there does not appear much room for the kind of compromise that Manuel says is needed: "Expanding employment is a critical requirement in our country and our labor movement has to recognize that there is sometimes a trade-off between the level of wages and the number of people employed."
But surprises may come from the new leader, a conciliatory consensus builder who cut his political teeth in the powerful National Union of Mineworkers.
Motlanthe rose quickly to become secretary general of the union in 1992 and was instrumental in negotiating a deal pegging mineworkers' wages to productivity when gold was selling low and marginal mines were shutting down. The compromise helped avert massive retrenchments.
-AP
