The rand weakened to R14.20 against the greenback as the government dilly-dallied on Eskom.
Hussein Sayed, chief market strategist at FXTM, said: “The rand was one of the worst performing emerging market currencies on Thursday as growing concerns over Eskom triggered fears about the state of the South African economy.”
Ramaphosa had indicated on Wednesday that he would yesterday announce measures the government would take to arrest the spate of blackouts that have hurt the already moribund economy.
However, Ramaphosa admitted his administration had not consulted broadly before announcing the break-up of Eskom.
“We accept, as government, that we have not done enough to bring some of the key stakeholders, such as labour, on board and are determined to correct this,” he said.
Ramaphosa said the police and the spooks would be involved in trying to safeguard energy supply.
“I have constituted a Special Cabinet Committee on Eskom, which will be led by the Deputy President, consisting of the Ministers of Public Enterprises, Energy, Finance, Transport, Intelligence and Police to be seized with the matter of Eskom on a daily basis and provide me with reports daily on what actions need to be taken to secure energy supply.”
Acting ANC spokesperson Zizi Kodwa earlier this week said that the latest round of load shedding was an attempt to sabotage the new vision for South Africa, which President Ramaphosa outlined in his State of the Nation Address last week.
Ramaphosa also said that the government’s preferred strategy in reducing human resources costs at the power utility would be to offer voluntary packages to staff.
The utility’s big headcount had surged from 32000 workers in 2007, to 48000 last year, at a cost of R29.5billion.
Andre Botha, a senior dealer at TreasuryOne said: “After the rand looked rock solid for the most of January, we have hit a major hurdle in the middle of February. As expected, the road leading up to the Budget was always going to be a rocky one, but add the Eskom load-shedding problems to the mix the road becomes impossibly steep,” Botha said.
Finance minister Tito Mboweni is expected to announce further measures to shore up Eskom’s balance sheet next week. Eskom has told bond investors that it wanted the government to assume about R100bn of its debt.
Johann Els, a chief economist at Old Mutual Investment, said it was unlikely that the Treasury would take on R100bn of Eskom debt at this stage.
“With large-scale cost-cutting not expected to start in earnest before the elections, a bailout of this size will likely trigger a ratings outlook downgrade from neutral to negative by Moody’s,” Els said.
“The agency has already warned that the restructuring of Eskom does not change the debt outlook as there has been no move yet on cutting costs.”
- BUSINESS REPORT