Firing a respected finance minister shortly before the major rating agencies are scheduled to give their verdict on SA’s sovereign credit rating is likely to cost this country dearly, several authorities warned on Friday morning.
"It must be emphasised that any sovereign downgrade would have a serious impact on banks and the business sector in general. It will also undermine our collective ability to fund social programmes, which will severely and sustainably worsen the lives of the poorest of the poor in our country," Banking Association of SA MD Cas Coovadia said in a statement.
Moody’s is scheduled to release its midyear sovereign rating review on SA on April 7 and S&P Global Ratings on June 2.
Referring to President Jacob Zuma’s "night of the long knives", which included replacing Pravin Gordhan with Malusi Gigaba as finance minister and Mcebisi Jonas with Sfiso Buthelezi as deputy finance minister, Coovadia said: "The specific change in both finance minister and deputy finance minister creates a dire loss of institutional knowledge and raises legitimate and alarming concerns regarding issues of fiscal discipline, protection of institutions and indeed the scope state capture."
Zuma’s appointments would trigger multiple downgrades, Nomura emerging markets analyst Peter Attard Montalto warned in a note e-mailed shortly after midnight when the new appointments were announced.
"We view this as an open attack on Treasury to replace people who are conservative and anti-corruption with people loyal to Zuma to help the Zuma faction win in December," Attard Montalto wrote.
In a statement titled "April Fool’s joke?" United Democratic Movement (UDM) leader Bantu Holomisa said: "The appointment of Malusi Gigaba as the new minister of finance is disconcerting, because of his clear association with the Gupta family.
"President Zuma is strengthening his hold on Cabinet with the appointment of Sfiso Buthelezi as Gigaba’s deputy and it won’t be surprising if people start dismissing these two as indunas from the palace whose main objective would be to facilitate the further looting of resources."
Holomisa pointed out that several ministers who had failed in their portfolios were given sideways promotions in Zuma’s Cabinet reshuffle while competent ministers were ousted.
Instead of punishing Faith Muthambi, Nkosinathi Nhleko and Bathabile Dlamini for their failures, they have been rewarded for showing loyalty to the president, Holomisa said.
Coovadia said: "The position of finance minister is a critical one. An effective and credible National Treasury is also important. These institutions are pivotal to creation of certainty in markets and in management of potential risks introduced by numerous factors. The action of removing a minister and a deputy-minister who have gained global and national credibility and were performing optimally under difficult circumstances raises questions about the rationale for their removal."
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