Anna Majavu

Anna Majavu

Finance Minister Trevor Manuel has taken a swipe at ANC allies' attempts to push the party's economic policies to the left.

"If our economic policies were designed for their populist appeal, if we tried to finance everything at once for everybody, then short-term gains would quickly give way to long-term misery," Manuel said yesterday in his medium-term budget policy statement to parliament.

Manuel rejected long-standing pleas by Cosatu and the SACP for more VAT zero-rating of food and an end to inflation targeting.

"Moderation of inflation must remain a central policy objective," Manuel said.

Cosatu says that targeting a low inflation rate results in pressure on the government and Reserve Bank to hike rates and force down wage increases.

Manuel also ruled out further VAT zero-rating of food, saying that higher and middle income groups would benefit "substantially more" than the poor from more VAT zero-ratings.

"Public expenditure can provide more effective and targeted relief," he said.