Manuel under pressure to raise welfare spending

Cosatu says it would like to see an increase in social welfare spending when Finance Minister Trevor Manuel presents his budget today. Opposition parties have called on him to stick to his tried and tested fiscal and economic policies.

However, economists say there will be great deal of interest to see whether Manuel will incorporate any of the policy proposals adopted by the new ANC leadership, especially given that the minister will have less money to spend.

Economists believe Manuel is under pressure to raise spending on welfare and education. They say this is a result of the change of leadership in the ANC, which could put more emphasis on reducing poverty.

Manuel may push the national budget into deficit today so that he can give billions of rands to Eskom. A deficit budget could prevent South Africa from improving its credit rating with international lenders. Sanlam chief economist Jac Laubscher says in the light of the crippling power shortages, government will now have no choice but to give Eskom huge financial support.