South Africa Presents Post-Apartheid Budget

CAPE TOWN -- President Nelson Mandela's government unveiled its first state budget Wednesday, imposing a one-time 5 percent levy on prosperous whites to pay for the changeover to black-majority rule. But in keeping with Mandela's promise not to frighten off foreign investors with massive new taxes, his ANC-led government avoided broad revenue hikes except on such items as luxury goods, tobacco and liquor. After Finance Minister Derek Keys presented the budget to parliament, Mandela said the spending plan addressed the high costs of transforming the country from white minority rule to black majority rule and laid the groundwork for addressing severe social ills left over from apartheid. "I think in the long run it is going to leave the field clear to raise the living standards of the people," he said. His predecessor, now Deputy President F.W. de Klerk, said the budget represented the cooperation and consensus of the various parties in Mandela's unity government, which includes de Klerk's National Party and the rival Inkatha Freedom Party. "There is consensus on the need for commitment to fiscal discipline, to economic growth and to budgetary provisions which will ensure that we achieve that economic growth," he said. Spending on the government's centerpiece Reconstruction and Development Plan would be financed entirely from savings -- with 2.5 billion rand ($714 million) allocated in the first year, Keys said in his parliament address televised live to the nation. The biggest part of the savings came from defense and military spending, which was cut by 650 million rand. Another 292 million rand will be set aside for public-works jobs to fight unemployment, said Keys, a respected fiscal disciplinarian who was retained by Mandela as finance minister after serving under de Klerk. The plan is aimed at raising the living standards of blacks, who comprise three-quarters of the population of 40 million, and who overwhelmingly voted for Mandela's ANC in April's all-race election to end three centuries of white domination. But the spending plan also was carefully calculated to send the right signals to whites who control the economy. The government stressed fiscal discipline and moderate measures to begin to correct the massive disparities in prosperity between blacks and whites. "I don't think it could have been better," said Mangosuthu Buthelezi, the home affairs minister from Inkatha. "I have no criticisms because I know that the country is going through a difficult time and the goals that have been set by the government are very difficult goals."