South African Finance Minister Pravin Gordhan sought to reassure investors that the government is serious about meeting its fiscal promises and to stave off further credit-rating downgrades amid the slowest economic growth since a recession in 2009.
“We have a good story to tell, but clearly we need to prove to ourselves and to them that we’re capable of working together to grow the economy, create jobs and make our fiscal framework a viable one,” Gordhan said in an interview on Talk Radio 702 on Wednesday, while on a trip to the UK and the US to meet with investors and rating companies.
Investors are seeking more stability in economics and politics in South Africa, and signs that growth will recover, he said. Moody’s Investors Service will visit South Africa next week to assess the government’s plans after placing the country on review for a downgrade, Gordhan said. Moody’s rates the country at two levels above junk and one level above Fitch Ratings and Standard & Poor’s.
Africa’s most-industrialised economy is at risk of falling into non-investment grade status as the economy slows, knocked by the worst drought in a century and weaker demand from its biggest trading partner, China. Confidence hasn’t recovered since President Jacob Zuma decided in December to install little-known lawmaker David van Rooyen as finance minister, causing the rand and bonds to plunge. Four days later, Zuma appointed Gordhan to the position he had held from 2009 to 2014 after officials in his party and business leaders intervened.
Gordhan told Moody’s that “we have never broken a fiscal promise that we’ve made in our 20 years as a democracy,” he said on Johannesburg-based PowerFM radio from Boston. “They want to understand where growth in this economy is going to come from, and we’ve given them examples of what we are working on.”
Gordhan said the president is dealing with a breakdown in the relationship between himself and Tom Moyane, the tax commissioner. “All we want is decency” from an official who is the equivalent of a department director general, he said.
South Africa’s currency fell on February 26 by the most against the dollar on a closing basis since 2011, as reports that Gordhan had threatened to resign if Moyane isn’t dismissed and the minister later warned of a campaign to undermine him. The rand weakened 0.2% to 15.4657 per dollar at 9am in Johannesburg on Wednesday.
© 2016 Bloomberg