South Africa’s President backtracks on finance minister decision, Gordhan’s re-appointment cheers markets

By bne IntelliNews December 14, 2015

After four days of severe market turmoil caused by the shock firing of respected finance minister Nhlanhla Nene and the appointment of relatively unknown and inexperienced lawmaker David van Rooyen on the critical post, South Africa’s President Jacob Zuma gave in and made another cabinet reshuffle, bringing back recognised former finance minister Pravin Gordhan.

Late on December 13, Zuma said that after having “received many representations to reconsider [his] decision” and after “serious consideration and reflection” he decided to appoint Gordhan, finance minister from 2009 to 2014 and presently minister of cooperative governance and traditional affairs as the new finance minister. Van Rooyen will take up Gordhan’s post.

“As a democratic government, we emphasise the importance of listening to the people and to respond to their views,” Zuma said in a statement.

Gordhan, who was surprisingly replaced by Zuma with his deputy Nene after the May 7, 2014 general elections, was widely respected for his fiscal prudency and professionalism, and his reinstatement boosted investment confidence, which was seriously damaged by Zuma’s previous move.

The South African rand, which slumped to a record low last week, recouped most of the losses by Monday morning, appreciating by some 5% against the US dollar since the announcement on Sunday night. The Johannesburg Stock Exchange also opened higher with the JSE FTSE all share index gaining more than 2% in early trading.

In his statement, Zuma underscored that Gordhan will work for stimulating more inclusive growth and accelerated job creation while keeping debt stable, promoting and strengthening fiscal discipline and prudence, preserving the stability of the financial sector, and ensuring adherence to the set expenditure ceiling while maintaining a stable trajectory of the government’s debt portfolio.

After Nene’s firing, rating agencies Fitch and Standard & Poor’s alarmed that any sign of fiscal loosening will affect negatively South Africa’s ratings, probably pushing them into junk status.

Related Articles

South Africa’s MTN to invest $350mn in Iranian broadband

South Africa’s MTN said it has agreed, on a non-binding and preliminary basis, to invest an initial $350mn into Iranian fixed broadband provider Iranian Net. The investment will give ... more

South Africa receives another downgrade to junk

Fitch Ratings on April 7 downgraded South Africa to junk status following the removal of Pravin Gordhan as finance minister and the enusing political crisis. Fitch's downgrade to 'BB+' ... more

S&P downgrades South Africa's credit rating to junk after cabinet reshuffle

Standard & Poor’s ratings agency has cut South Africa's sovereign credit rating to 'BB+' from 'BBB-' and the long-term local currency rating to 'BBB-' from 'BBB', both with a negative ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss