Money Talks: South Africas Finance Minister in hot seat

South Africa’s economy is already under pressure. But could it also be on the verge of political upheaval? President Jacob Zuma has unexpectedly ordered his finance minister to return home from an overseas trip, where Pravin Gordhan was meeting foreign investors to drum up support. The move has led to speculation that Zuma may sack Gordhan – the country’s third finance minister in 18 months. Andre-Pierre du Plessis reports, Chief Economist at the South African Institute of Race Relations Ian Cruickshanks provides analysis from Johannesburg.

South africa’s economy is already under pressure but could it also be on the verge of political upheaval president jacob zuma has unexpectedly ordered his finance minister to return home from an overseas trip pravin gordhan was meeting foreign investors to drum up support the move has led to speculation that zuma may be about to sack gordon he’s the country’s

Third finance minister in 18 months andra appeared to plessy reports after presenting south africa’s annual budget finance minister pravin gordhan travelled to london and new york to reassure investors that his country is a good place to put their money but just as it was about to start his uk roadshow president jacob zuma recalled gordon the south african rand

Immediately plunged three percent against the dollar its biggest decline in almost a year at a time when iran had recently strengthened by more than 20 percent some speculate zuma told gordon to return because his legal team is facing off with 14 private companies the court case is over the blacklisting of their bank accounts by south africa’s top four banks

The companies are all owned by the gupta family who have close ties to zuma the banks were forced to close their accounts last year because of suspicious transactions but the guptas accused gordon of instigating the account closures others speculate zuma summit gordon to fire him there’s been a drawn-out battle between the two over government spending arriving a

Court on tuesday gordon denied he’d been fired are you still the minister of finance yes would you ever resign because of the pressure does it ever get too much and just think i can’t take this anymore it’s not worth it but the death of a founding figure the ruling party may have upset zuma’s priorities the anti-apartheid veteran amick estrada died on tuesday

And government is now focused on a public memorial to honor his memory that means caught in sacking and reshuffling of zuma’s cabinet may have to wait and while it does the rant can be expected to fall even further under a pwc grt world so let’s go straight to johannesburg and speak to aaron cruikshank’s he’s chief economist at the south african institute for

Race relations ian thank you ever so much for joining us on money talks does it look to you as if we’re getting a rerun of 2015 when we had that revolving door of finance ministers and a plunge in the rand and stock markets and billions right off the markets well certainly we are having a replay on the damage that’s been done to the round or some of the damage

Has been done to the round when we had the last fiasco it was a heck of a lot worse could it be worse again yes i suspect so of course as your announcer just said the passing of ahmed kathrada one of the struggle veterans this morning would put a hold certainly there have to be some time to let go for a for to see how they can then refocus back away from this

Personal change back into managing the economy managing the finance minister’s position and there seems to be a lack of understanding this is a crux of the matter of just how financial markets react to uncertainty there’s nothing they hate more than uncertainty and in an emerging market which has a high budget deficit a high current account deficit all these things

Are really very inopportune and and i suspect that it does make one wonder if president is aware of the damage that’s being done after all you know the round has taken a beating the cost of imports is going to saw his electorate is going to find their cost of living a lot higher it just seems a poorly worked hard strategy if it has been worked hard if it is a

Strategy indeed i was about to say and let’s let me ask you what has gordon’s impact been on the south african economy you brought up the issue of the deficits there but but overall this is his second term as finance minister what’s his impact being on the economy he’s come along at a very difficult time but what he has attempted to install into a large extent

Extent successfully is having a budget and sticking to it bringing the budget deficit down making it into a reasonable level getting it down to a level where the international rating agencies are going to say well that’s going in the right in the right direction and we see you now as a potential investment destination i think we were moving away from that before

His second tenure began and it’s it’s why it’s all the more surprising that he’s being recalled in structured we are told to return at this time this delicate time when the minister was busy having negotiations with the ratings agencies with major funding and clients people who organizations who were big funders of south africa in foreign direct investment in

Foreign portfolio flows this is going to put them off and it’s going to make it them quite reluctant to increase the investment which we desperately need and which the minister was working on quite successfully in now just in the last few hours pravin gordhan has tweeted you know fresh after a recall the rand drops like a lead football i’m i’m back at the thule

House i’ll keep at this damn game of cat and mouse he sounds defiant if you were advising pravin gordhan and all the government what would the three top priorities be for the finance minister the finance minister has to stick to his guns he is he should not back away and say okay we’ll go with an adjustment to the spending patterns of government we’ll go with a

Lying and interference in the private business of major banks remember our banking sector is rated as one of the top managed controlled banking sectors in the world that’s something to be proud of and it’s something to be maintained if we’re going to continue our funding and international credit agreements over the longer term at the moment what we’re seeing is

A risk of withdraw of international foreign parties and if that happens we gain to find the economy has the risk of really imploding of grinding to a halt and this is the worst thing that we can need at a time when we need business expansion new job creation and so on we’re moving away from it this is a terrible risk in crookshanks chief economist at the south

African institute of race relations great to have you on the program

Transcribed from video
Money Talks: South Africa`s Finance Minister in hot seat By TRT World