New S.African minister vows to tackle rand collapse
South Africa's new Finance Minister Pravin Gordhan vowed Monday to stabilise the tottering economy after his predecessor lasted just four days in the job amid a dramatic slump in the rand.
“We will stay the course of sound fiscal management,” Gordhan told reporters. “Our expenditure ceiling is sacrosanct. We can have extra expenditure only if we raise extra revenue.”
President Jacob Zuma last week ousted respected finance minister Nhlanhla Nene in favour of the little-known David van Rooyen, triggering a backlash that led to a U-turn on Sunday when Rooyen himself was removed.
“The facts about the developments that took place last week and the response of the financial markets are well-known,” Gordhan said.
“Our currency fell, the stock market dropped by 2.94 percent and bond yields shot up by over 150 basis points.
“Our government is acutely aware of the financial impact this had on those who are invested in this economy.”
Zuma was accused of sacking Nene partly because the minister had publicly slapped down a move by state-owned South African Airways (SAA) to renegotiate a plane-leasing deal with Airbus.
Gordhan on Monday issued a sharp warning against alleged malpractice by those involved in SAA and other state-owned companies.
“It’s time that individuals or groups of individuals stop playing with state entities as if it’s a personal toy from which you can extract money when you feel like,” he said.
“These are public institutions, their primary responsibility is to either contribute to the economy (or) contribute to providing a service or revenue.”
Gordhan, who served as finance minister from 2009 to 2014, was re-appointed to the role in a bid to calm markets after the rand fell to an all-time low of 16 to the dollar when Nene was fired.
The political tumult unnerved many investors in South Africa, which is beset by high unemployment, slow growth and accusations of worsening government corruption.
“We are not going to make reckless decisions,” Gordhan said.
“We are going to ensure that the kind of discipline that government has demonstrated since 1994 is the kind of discipline that will continue and nobody needs to fear that we will move in any other direction.