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.
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