Johannesburg – The chance of Finance Minister Pravin Gordhan losing his post is higher, with a likelihood of former Eskom boss Brian Molefe taking his position, according to an emerging markets economist.
This follows reports that President Jacob Zuma ordered Gordhan and his deputy Mcebisi Jonas to withdraw from an international investor roadshow which was scheduled to take place in the UK and US this week.
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The trip would focus on securing portfolio and real economy investors, Gordhan said at a briefing on the economy held at Deloitte on Friday. He added that Treasury would meet up with rating agencies to address their concerns.
“At this point in time we have a good story to tell as South Africa,” said Gordhan. If the country continues to move in the “right direction” and if role players cooperate, it will be reflected in growth numbers, he added.
However, orders by Zuma to cancel the trip present a new risk to Gordhan’s position, Nomura emerging markets economist Peter Attard Montalto explained in a statement. “Either PG (Pravin Gordhan) obeys and Zuma is viewed as stronger, or PG disobeys and challenges Zuma to fire him. If the roadshow continues, then we will know what path is being taken.”
Montalto previously said that there was a 60% chance of a Cabinet reshuffle; however, Gordhan was not initially on the chopping block. “This is a dramatic shift in risks clearly given the baseline had been originally that a reshuffle would not see PG touched,” he said.
READ: A 60% chance of Cabinet reshuffle – economist
Montalto warned that the reshuffle was likely within the second half of March and that it would impact the markets as well as the rand. The rand weakened from R12.36/$ to R12.60/$ following the initial report of Gordhan's recall in the Daily Maverick.
By 13:03 the rand was trading weaker at R12.63/$ after touching a new year low of R12.66.
“It is also possibly that Zuma wants PG there if he only reshuffles the deputy [Jonas],” Montalto said.
He also suggested that this announcement is also a “test” by the Presidency to see the extent of the “political shock” markets can take. “So far the market reaction has been very muted. Suggesting they could indeed go ahead with a reshuffle,” said Montalto.
Montalto expects Molefe to either be placed in the position of deputy minister of finance, or even replace Gordhan as minister. Nkosazana Dlamini-Zuma may be appointed to the Presidency as a minister of transformation, he added.
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