Johannesburg - Stability and continuity have been shattered at the Treasury after the axing of finance minister Nhlanhla Nene last night and by 10.40am the rand/US dollar rate was at R14.97.
Nene had served 19 months before being replaced by the unknown David van Rooyen.
The two most common ideas circulating as possible reasons for Nene’s demise were his lack of support for chairwoman of crisis-stricken South African Airways, Dudu Myeni, who is known to be close to President Jacob Zuma, and for what has been called Zuma’s “pet project”, the nuclear build programme.
Today, Myeni, who claimed to have been at a bank, asked that questions be e-mailed to her when called by the Daily News. She said she preferred to respond in writing rather than give a telephonic interview.
The move has raised alarm bells as none of Zuma’s predecessors interfered with the finance portfolio.
Subsequent to the transition period, which saw the ministry being led by Derek Keys and Chris Liebenberg respectively, president Nelson Mandela appointed Trevor Manuel who held the portfolio for 13 years.
Manuel handed over the reins to Pravin Gordhan, who was at the helm for five years with Nene as his deputy. Nene succeeded Gordhan after last year’s national government elections – a move, which was widely praised as it retained continuity in this key portfolio.
Econometrix chief economist, Azar Jammine, said this morning had been one of the most depressing of his career.
“Anything the new minister does is going to be regarded with suspicion, as pandering to the whims of the Presidency.”
He painted a grim picture of what this meant for the country’s immediate economic future. Confidence in the national Treasury would be destroyed, he said.
Standard & Poor’s Rating Services recently changed its outlook on the country’s debt from stable to negative.
The rand would remain weakened in the foreseeable future, Jammine said, and this would lead to inflation pressures, an expected interest rate hike of more than .25% and increased job losses.
Mike Schüssler, chief economist at Economists Dotcoza, said this was South Africa’s 9/11. “The people who are going to suffer the most are the poor,” he said. “It’s your pension at risk, your savings in the bank.”
Schüssler said the news was “absolutely devastating” for business and consumer confidence.
According to economist, Dr Iraj Abedian, the news drew “a blend of shock and disbelief. It is like changing the captain of a ship in the middle of a storm and replacing him with someone with no experience of the ocean”, he said.
South Africa was on the brink of being rerated to junk status and in the circumstances, fiscal policy required an experienced hand. To bring in the inexperienced Van Rooyen to replace Nene was “mind boggling”, Abedian said.
Nedbank economist, Isaac Motshego, said the news was a shock.
“Just on Friday international rating agencies put us at the bottom in their ratings… now this!
Unknown
“There is no explanation why Nene was sacked, yet the president acknowledges that he (Nene) did well under difficult conditions. This is bad for our economy and worse, this new man is virtually unknown,” Motshego said.
Nomura economist, Peter Attard Montalto, said the removal of Nene was “a serious erosion of the institution of the national Treasury that accelerates the credit and ratings negative story”.
Montalto said it was likely Nene had been removed over his pushback on nuclear affordability and his move to exercise control over SAA.
“We do not believe Nene was removed because of fiscal policy… The politics and personalities around the issue of parastatals however, intervened and required his removal,” he said. – Additional reporting by Craig Dodds, Marianne Merten and African News Agency
DAILY NEWS