Cape Town - The volatility South Africa’s currency was experiencing was not due to President Jacob Zuma’s actions and utterances, Finance Minister Pravin Gordhan said on Thursday.
Addressing a media briefing following Wednesday’s special cabinet meeting on the state South African economy, Gordhan said there were a wide range of factors, some unknown, which had led to the rand sliding to a new low on Monday.
“The circumstances in which we find ourselves is very complex…the world is in a terrible place economically speaking and there are many complex dynamics that are impacting upon emerging market countries or developing countries at this point in time, including our own challenges that we admitted very frankly…,” said Gordhan
“The rand does not operate on what an individual does or says. It might well be taken into account.”
Late last year, the rand plunged after Zuma fired Nhlanhla Nene as finance minister, replacing him with little-known Des van Rooyen. The unit recovered after Zuma backtracked amid pressure and re-appointed Gordhan to the critical portfolio.
Earlier, Gordhan’s colleague, Minister in the Presidency Jeff Radebe, painted a bleak picture of the economy, stating that it would require a collective effort from government, business, and labour to improve the situation.
Radebe said the fall in commodity prices, which was affecting producers locally, was unlikely to see a reverse.
While government urged exporters to take advantage of the depreciation of the rand, it acknowledged that slowing economic growth would lead to “subdued demand for South African products abroad”.
“The South African Rand, which is amongst the most traded emerging market currencies, has been particularly hard-hit in recent weeks,” Radebe said.
“In this difficult global context, in which all economies face difficult challenges, Cabinet reaffirmed the need for government to intervene strategically and more decisively to restore the momentum of economic growth.”
Cabinet endorsed “stronger measures to restore a sustainable fiscal path,” Radebe said, but these measures would only be unveiled when Gordhan delivers his budget speech on February 24.
Gordhan used the media briefing to assure South Africans that government was doing “everything possible to stabilise our economy”.
He urged people not to “panic”. “You do not have to be anxious about our environment,” Gordhan said.
Turning to cash-strapped South African Airways, he said the plan was to return the airline to profitability in “hopefully shorter than five years”.
“A, our objective is to stabilise the airline and the company. B, is to ensure that the company returns to some form of profitability…C, SAA mustn’t be a liability to the fiscus,” Gordhan said.
This would not only apply to SAA, but all state-owned companies
“They must stand on their own feet, and in fact they must pay dividends to the State, so rather than ask for bailouts, pay dividends to the State because they are running efficient businesses which is absolutely crucial,” Gordhan said.