President Jacob Zuma has been whipped into line and forced to remove his newly appointed finance minister David “Des” van Rooyen.
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Zuma dumped respected finance minister Nhlanhla Nene on Wednesday – leading to media speculation that he was protecting the chairwoman of the national airline, Dudu Myeni, to whom he is said to be “close”.
The rand recovered to 15.09 rand from 15.89 rand against the US dollar immediately after the news broke late Sunday night.
“I have appointed Pravin Gordhan, the current minister of cooperative governance and traditional affairs as the new minister of finance”.
The Presidency announced in a statement on Sunday night that Gordhan and Van Rooyen will be switching portfolios.
“I think it’s a very good decision on the part of the president to reappoint “PG” as minister of finance”, said Mboweni over the phone.
South Africa’s Beeld newspaper, citing an informed person, said Gordhan’s appointment was preceded by a crisis meeting between Zuma, politicians and representatives of the private sector on Sunday afternoon.
“Treasury is widely seen as a prudent manager of national resources and has … developed a reputation for being largely insulated from political expedience”.
Mmusi Maimane, the leader of the main opposition Democratic Alliance party, said: “Zuma must stop playing Russian roulette with our economy”.
Zuma was accused of sacking Nene because the minister had not rubber-stamped planned spending on a huge nuclear power programme and publicly slapped down a move by state-owned South African Airways (SAA) to renegotiate a plane-leasing deal with Airbus.
Credit ratings agency Fitch downgraded South Africa last Friday, leaving the continent’s most sophisticated economy just one notch above “junk” status, and said on Thursday Nene’s firing “raised more negative than positive questions”.
Zuma assigned Gordhan, who has also served with distinction as the Commissioner of the South African Revenue Services before excelling as Minister of Finance, with several tasks to address the country’s failing economy.
It called for “adherence to the set expenditure ceiling while maintaining a stable trajectory of our debt portfolio, as set out in the February 2015 Budget”.
“Her relationship with the President is purely professional, and is based on the running of the Foundation”, the Presidency said in statement.
EWN reporter, Govan Whittles said Gordhan is expected to elaborate on his plans to restore fiscal stability at a press conference after the economic impact of the recent cabinet reshuffling.
South Africa’s benchmark stock index rallied as much as 2.2 percent, before paring gains to trade 0.8 percent up at 48,433.16.
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The market turmoil could not have come at a worse time for South Africa as investors brace for the first U.S. Federal Reserve interest rate increase in nearly a decade and a potential exodus of capital from emerging markets.
