Johannesburg - South Africa’s newly appointed Finance
Minister Malusi Gigaba should be given time to settle into the job before being
judged on his performance, according to central bank Governor Lesetja Kganyago.
President Jacob Zuma’s decision to fire Pravin Gordhan as
finance minister hasn’t affected ties between the central bank and the National
Treasury, Kganyago said in an interview on Thursday in Washington.
The minister “needs to be given time to create the rapport
with his team at the Treasury,” he said. “It’s a very competent team and
hopefully he is able to hold on to that team.”
The remarks seek to ease concern that Gordhan’s dismissal
will affect the country’s fiscal and economic policies. The cabinet reshuffle
at the end of March prompted S&P Global Ratings and Fitch Ratings Ltd. to
cut South Africa’s credit rating to below investment grade, causing the rand to
weaken against the dollar. While the currency has since trimmed its losses as
investors sought higher emerging-market yields, the downgrades risk undermining
investor confidence in Africa’s most-industrialized economy.
Policy intact
Gigaba plans to meet with Moody’s Investors Service
during his current visit to the U.S. to reassure the ratings company that
fiscal policy won’t change, the minister said this week. Moody’s placed South
Africa on review for a downgrade after Gordhan was fired. Treasury
Director-General Lungisa Fuzile has since announced he will step down next
month.
Kganyago, a former head of the Treasury, said he’s
already held two “very cordial, very extensive” meetings with the finance
minister and his deputy to discuss the challenges facing the economy.
“We have got a long relationship,” Kganyago said of
Gigaba. “What you always need in a minister of finance, it’s not an economic
guru, you need someone who knows the politics. The Treasury is endowed with a
depth of talent, capable of putting together fiscal options.”
The rand on Thursday reached its strongest level against
the dollar since the reshuffle after having erased its 10 percent gain for the
year. It gained 0.1 percent to 13.1431 per dollar by 1:15 p.m. in Johannesburg
on Friday.
Read also: Gigaba assurance boosts the rand
Kganyago and Gigaba are in charge of reviving an economy
that the World Bank expects to expand less than 1 percent for the second year
in a row. The central bank, however, is sticking to its forecast of a 1.2
percent expansion for now, the governor said.
“We still have a view of an economy that it’s improving
but still in a low-growth trap,” he said. The Monetary Policy Committee will
“take stock” of the latest economic developments when it meets again in May, he
said.
The MPC has kept the benchmark interest rate unchanged
since last March after raising it by 200 basis points to 7 percent over two
years to curb consumer prices. Inflation eased in March to 6.1 percent, the
lowest level in six months and just outside the upper end of the central bank’s
target band.
The monetary policy stance “strikes the necessary balance
between dealing with inflation and supporting the nascent economic recovery,”
Kganyago said.