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Cape Town - Finance Minister Pravin Gordhan said on Friday that Treasury was privileged to retain Lungisa Fuzile as director general for another two years.
Minister in the Presidency Jeff Radebe announced the extension of Fuzile’s contract at a post-Cabinet media briefing. This followed speculation that Fuzile's contract would be terminated in May. This was amid investor fears that Treasury was being eyed by allies of President Jacob Zuma, who wanted to control the public purse.
Chief economist for Africa at Standard Charted Razia Khan said this reappointment will be overwhelmingly positively received by markets.
"The news helps to end uncertainty over the likelihood of imminent change at the Treasury."
Fuzile, who at some time managed relations with credit rating agencies and investors, staying put at Treasury will also settle concerns for ratings agencies, said Khan.
The country’s credit rating was downgraded to one level above investment grade by Fitch, while Standard and Poor’s cut the outlook on its equivalent rating to negative.
"For ratings agencies it reassures on the ability of Treasury to execute fiscal consolidation plans, and much more importantly, reinforces perceptions of the strength of the country’s fiscal institutions," she said.
Gordhan said since Fuzile's appointment in April 2011, he has contributed to strengthening the reputation of Treasury as a stable institution with a depth of experience in its ranks.
"He has had to lead Treasury at a difficult time, following a period of a recession and low growth after the 2008 global financial crisis. He has led the team that has advised government on the difficult choices that are necessary to maintain South Africa’s fiscal sovereignty.
"He has been instrumental in establishing a budget planning approach that links expenditure to the objectives of the National Development Plan and advancing policies that are aimed at lifting levels of economic growth.
During his time, indicated Gordhan, key development finance institutions such as the Development Bank of Southern Africa and the Land Bank have been successfully turned around.
"Under his leadership, improvements to financial management have been put into place, including the establishment of the Office of the Chief Procurement Office, to modernise procurement and ensure better value for money for government," said Gordhan.
The DA's David Maynier said Fuzile’s contract extension is a victory for Gordhan and a blow to those who are determined to capture the Treasury.
"Over the past five years, Fuzile has been tried-and-tested: he has the leadership skills, experience and integrity necessary to lead the Treasury."
Fuzile’s primary responsibilities as director general of the National Treasury include managing the department, producing a sound and sustainable national budget, managing government’s financial assets and liabilities, overseeing government accounting policies and standards, regulating public sector procurement through policy formulation, developing appropriate fiscal policy and financial management, and improving financial management throughout government.
The rand strengthened 0.81% to R14.2946/$ in late afternoon trade with the unit heading for a five-month high.
The unit gained on news of an surprise trade surplus in March for the first time this year; and after a high court set aside a 2009 decision to drop corruption charges against Zuma before he became president of South Africa.
