19 December 2008 Oh for a boring year By NAZMEERA MOOLA This year has certainly been jam-packed with excitement. A friend was recently telling me how she dragged her 10-year-old son in front of the TV in September as the financial sector started melting down. "This is historical," she told young Tom.

"You will be studying this in years to come." A few weeks later she was equally emphatic that he focus on the peaceful change of president in SA, as Thabo Mbeki stepped down and Kgalema Motlanthe was sworn in. "The lack of bloodshed was momentous," she said. And then there was the "historical" election of America's first black president, Barack Obama. By mid-November the poor child was saying: "Mum, stop being such a drama queen!" But this year has been amazing. The political developments have been largely good. But the financial developments have left many people exasperated at the Grinch that stole their savings. As Washington grapples with whether or not to save US automakers (and, soon, airlines, steel mills and a fair bit else), the days are rapidly passing, and this exhausting year will soon end. In this rather difficult environment a new SA government will take office by next May. If I were to give it three pieces of advice, they would be: Your room to manoeuvre has shrunk considerably. The global credit crisis has left pension funds in the US and Europe fleeing from emerging markets. Amid huge outflows from the asset class, financing SA's large current account deficit has become much more difficult. Fortunately, the deficit is expected to shrink considerably through 2009, and end the year at around 4,4% of GDP from the elevated 8% now. But the markets are wary. And any moves towards widely populist fiscal (or monetary) policy will be swiftly punished. This effectively rules out a basic income grant - much as many on the Left are calling for one. SA cannot afford it. The best form of fiscal stimulus now is to ensure that the infrastructure programme is implemented. This will create jobs and long-term competitiveness. Don't overreact on the regulatory front. It is important to ensure that increasing financial regulation does not spread willy-nilly into other areas. Trade policy and labour markets are the two key areas that come to mind. SA desperately needs to loosen its labour markets to increase employment. Among the youth, unemployment is 40%. As perverse as it sounds, making it easier to fire workers will encourage employers to hire more. Increasing trade regulation was one of the big factors that turned the 1929 stock market crash into the Great Depression. Any regression on trade policy will hurt everyone. Focus on delivery. Your best hope is to make every effort to ensure that delivery - in the areas of education, health and crime prevention - improves significantly. This will immediately benefit SA's poorest. And if the poor see their lives improving, government will be insulated from the myriad populist demands made by the unions. The single best way to ensure that delivery improves is to make it easier to fire under- or non performing government employees. Right now, the lazy or incompetent are left in their positions. This disheartens the capable, who eventually leave for the private sector. As an extra thought, getting rid of Zimbabwe's President Robert Mugabe would also be hugely beneficial, to Zimbabwe, SA and the region. One hopes the old Chinese curse so manifest this year will be left on the shelf next year: may we rather live in boring times. And hopefully Tom will not be dragged in front of the telly to witness some "must see" event for a few years to come. Unfortunately, I think the chances of this are slim. Moola is head of macro strategy at Macquarie First South