Gigaba in hot seat

South Africa would benefit from a wave of positive market sentiment under new President Cyril Ramaphosa, Finance Minister Malusi Gigaba said on Friday, as speculation swirled about whether he would keep his job.

Ramaphosa is expected to reshuffle his cabinet and Gigaba, seen as loyal to Zuma, is among ministers likely to be affected. Ahead of the State of the Nation address on Friday, Gigaba said SA should keep riding the wave of positive market sentiment after the change of leadership.

He said that over the medium term, SA would work“very hard” to restore its investment grade after last year’s downgrades to “junk” status by S&P Global Ratings and Fitch. Moody’s, which rates SA debt on its lowest investment grade rung, placed the country on review for a downgrade.

“It’s not going to be easy to restore our investment credit rating, but we are going to continue doing our best to maintain, at least from the point of view of Moody’s, an investment grade and to ensure the other ratings agencies do not revise us downwards,” Gigaba said.

“We need to sustain the level at which we are for now.”

Moody’s is expected to make a decision after the Treasury presents its 2018 budget to Parliament on Wednesday. The market’s focus was on whether Ramaphosa would reshuffle the cabinet before budget day and replace Gigaba.

Some economists and analysts questioned Gigaba’s credentials when he was named to head Treasury last year, replacing Pravin Gordhan who had a strong reputation for fiscal prudence.

Though he lacked an economics background, Gigaba was no policymaking novice, having been public enterprises minister and home affairs minister before moving to the finance ministry.

Rand Merchant Bank analyst John Cairns said: “Speculation is rife over who will read the budget on Wednesday, but we will be more focused on the content than the persona.” – Reuters