Hanekom slates Treasury for 'inadequate' downgrade analysis

Cape Town – Derek Hanekom, ANC MP and former tourism minister, criticised National Treasury on Tuesday for its “inadequate analysis” of the downgrades of South Africa’s sovereign credit rating in April.

“We all know the downgrades followed rapidly after the former finance minister (Pravin Gordhan) was removed and the reasons given for his removal were hopelessly unconvincing, which gave rise to serious concerns. Your analysis (of the downgrades) is therefore not accurate,” Hanekom said.

National Treasury was briefing Parliament’s standing committee on finance on its fourth-quarter report for 2016, and also responded to questions posed by MPs during a previous engagement in May.

During the deliberations, National Treasury repeated its previous explanation for the credit ratings downgrades by Standard & Poor’s and Fitch in April, citing low economic growth, policy uncertainty, rising contingent liabilities and poor governance at state-owned enterprises (SOEs) as reasons for the downgrade.

National Treasury’s reasons did not satisfy Hanekom.

“The downgrades are serious,” he said, “and the analysis needs to be serious.”

He told officials of National Treasury that he realised they cannot give reasons why Gordhan was “arbitrarily removed”, but that they need to elaborate on matters.

“You mention policy uncertainty. But what policy uncertainty? What is Cabinet doing and what is the finance minister doing in close consultation with the governing party to address it?

"Who’s creating it (the policy uncertainty)? What are you doing to address this? Why are our institutions as weak as they are?”

Hanekom told committee chairperson Yunus Carrim that he knows his questions may be uncomfortable, but that they need to be asked.

He added that it’s not enough to say there are “governance problems” at SOEs. “We need to know why institutions are not strong and what the remedial action is.

"If the problem is with boards, it’s easy for Cabinet to decide who gets appointed to boards. I know it goes beyond that, but I’m asking these questions because it’s the response we get.”

Hanekom, who led the charge to compel President Jacob Zuma to step down in November last year during an ANC national executive committee meeting, was sacked as tourism minister on March 31.

During the same Cabinet reshuffle, Gordhan and former deputy minister Mcebisi Jonas were also removed from the Finance Ministry, which sent the rand and markets into a tailspin and saw South Africa’s sovereign credit rating downgraded to junk status.

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