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Treasury finally gets US trip, but now under junk status cloud

Apr 10 2017 21:38
Matthew le Cordeur

Cape Town – National Treasury will finally get to embark on its investor roadshow after former finance minister Pravin Gordhan was recalled from his UK trip late last month and former deputy finance minister Mcebisi Jonas was barred from travelling on the US leg of the trip.

Zuma had originally used a questionable intelligence report as his reason to cancel the investor engagements, as well as for removing Gordhan and Jonas from their positions on March 30, various officials said.

READ: Rand tanks as Zuma's Gordhan move fuels reshuffle fears

In a sudden turnaround, African National Congress secretary general Gwede Mantashe told reporters last week that the party accepted that Zuma fired Gordhan because of an "irretrievable breakdown of trust", and not because of an intelligence report.

FULL STATEMENT: Gordhan's eight hours in London

The inspector general of Intelligence said on Monday that it will probe the origins of the "intelligence report", which allegedly implicated Gordhan and Jonas in a plot to undermine Zuma's government, with the assistance of international financial firms.

New Minister of Finance Malusi Gigaba will now travel to the US with a far harder task than was set for Jonas. While the former deputy minister simply had to reassure investors that South Africa was still a sound investment destination, Gigaba has to restore investor confidence following South Africa’s downgrade to junk status by two rating agencies for his very appointment.

Standard & Poor’s and Fitch said political instability and policy uncertainty had increased following Zuma’s Cabinet reshuffle, which saw Gigaba and Sfiso Buthelezi take over Gordhan and Jonas’s roles respectively.

READ: Fitch downgrades SA to junk status days after S&P relegates SA to junk

The former Treasury politicians were well-liked overseas and had managed to prevent rating agencies from downgrading South Africa for a full year following the removal of Nhlanhla Nene as finance minister – another move that scared investors and rating agencies.

National Treasury said Gigaba will meet with investors in Johannesburg and Cape Town on Wednesday and Thursday respectively.

He will then travel to the International Monetary Fund/World Bank Spring meetings in the US in two weeks’ time, “where he also plans to meet with international investors”, Treasury said in a statement.

Last week Gigaba met with the banking community and on Tuesday he will meet with Nedlac.

“Gigaba will this week continue engagements with key stakeholders, which he started since assuming his position almost two weeks ago,” Treasury said.

“This is part of a series of engagements the minister plans to undertake to restore confidence domestically …

“The objective of the meetings with stakeholders (in the US) is to primarily assure investors and prospective investors that South Africa’s policies have not changed and that the country remains an attractive investment destination.”

READ: Forget all the noise outside, Gigaba tells Treasury

President Jacob Zuma said he met Gigaba, Buthelezi, SA Reserve Bank governor Lesetja Kganyago and SARS commissioner Tom Moyane on Monday to discuss the impact of the credit rating downgrades and how government should respond and unite the country.

“The finance minister has been engaging the business community,” Zuma said at the Chris Hani Wreath Laying Ceremony in Boksburg.

“Engagements with all social partners including labour will continue, because we make progress and find solutions when we work together.”

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