Give Gigaba time - Kganyago

Finance Minister Malusi Gigaba at speaks a press conference at the National Treasury in Pretoria to reassure investors.Photo: Jacques Naude

Finance Minister Malusi Gigaba at speaks a press conference at the National Treasury in Pretoria to reassure investors.Photo: Jacques Naude

Published Apr 21, 2017

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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.

BLOOMBERG

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