https://www.polity.org.za
Deepening Democracy through Access to Information
Home / News / South African News RSS ← Back
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by

Close

Embed Video

Fitch questions S Africa’s economic policy following Finance Minister debacle

Fitch questions S Africa’s economic policy following Finance Minister debacle
Photo by Duane Daws

15th December 2015

By: Natalie Greve
Creamer Media Contributing Editor Online

SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

The replacement of a second Finance Minister in South Africa within five days has not enhanced confidence in government effectiveness and leaves questions over the direction of economic policy, Fitch Ratings cautioned in a statement on Tuesday.

In this context, the agency held that February's budget would be an important event in assessing the government's commitment to prudent management of the public finances.

Advertisement

This came as newly reappointed Finance Minister Pravin Gordhan on Monday described government's expenditure ceiling as “sacrosanct”, adding government would “unreservedly continue our fiscal consolidation process and we will stabilise our debt in the medium term”.

Fitch viewed the nominal noninterest ceiling, which the government had met since 2012, as an important pillar of fiscal discipline.

Advertisement

“Nevertheless, the reappointment of Gordhan does not remove all the uncertainty over government effectiveness and the coherence and credibility of economic policy generated during a turbulent week.

“The market reaction to the [surprise appointment of David van Rooyen] and President Jacob Zuma's subsequent [change of heart] may strengthen the hand of Gordhan and those in the cabinet arguing for prudent fiscal policy, at least in the near-term.

“However, the earlier appointment of van Rooyen in place of Nene still raises questions over Zuma's motivation for the change and what it reveals about his economic policy preferences,” Fitch noted.

It added that change in leadership at the National Treasury would be relevant to its sovereign rating assessment if it led to a loosening of fiscal policy or weakening in the transparency and financial management of State-owned companies, which represented a contingent liability to the sovereign.

Clarity over government policy regarding the proposed nuclear power building programme and procurement plans by South Africa Airways would also be instructive in the wake of this week's events.

Fitch identified looser fiscal policy, which resulted in a failure to stabilise the ratio of government debt to gross domestic product as a rating sensitivity when it downgraded South African to 'BBB-' Stable on December 4.

EMAIL THIS ARTICLE      SAVE THIS ARTICLE

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options
Free daily email newsletter Register Now