South Africa's under-fire finance minister declines to comment on ANC backing

October 27, 2016 2:30 AM EDT

South African Finance Minister Pravin Gordhan delivers his medium term budget speech in Cape Town, South Africa October 26, 2016. REUTERS/Sumaya Hisham


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By Stella Mapenzauswa

CAPE TOWN (Reuters) - South African Finance Minister Pravin Gordhan declined on Thursday to say whether he was confident of the ruling party's support, less than a week before he appears in court to answer fraud charges in a saga that has rocked the government.

Speaking a day after presenting his mid-term budget to parliament, Gordhan said he had tried not to let his Nov. 2 court case distract him while outlining measures to help kick-start an economy that he forecast would barely grow this year.

Gordhan is accused of fraudulently approving, in a previous post as head of the revenue service, early retirement for a deputy tax commissioner and re-hiring him as a consultant, costing the tax agency 1.1 million rand ($79,000).

He has denied any wrongdoing, saying the case is politically motivated, a sentiment echoed by opposition parties, business leaders and some senior African National Congress (ANC) party figures. The state prosecutor has rejected allegations of political interference.

Asked during a post-budget breakfast meeting whether he was still confident he had political backing, Gordhan said: "I'm not trying to duck, but I'm not going to answer it."

The ructions in government have weakened the rand and bonds in an economy struggling to create jobs. Some analysts say President Jacob Zuma's allies are driving the investigation in a bid to oust Gordhan, something the president denied.

"He (Gordhan) is well aware that while he does have some support inside the ANC, the faction that's supporting him is not winning," NKC Africa Economics analyst Gary van Staden said.

"If you're asked if you have support and you say I'm not answering that question, obviously he thinks he doesn't."

Gordhan, who on Wednesday slashed growth forecasts for the next three years and predicted wider budget deficits than previously expected, said he was not preoccupied with whether he had done enough to stave off credit rating downgrades.

"Our preoccupation is not rating agencies. Our preoccupation is putting the country on the right footing," Gordhan said.

"If we build confidence to the point where we get investment going ... everybody including ratings agencies will believe that we as a government are doing the right thing," he said.

Moody's, Fitch and S&P, who are due to review the credit rating of Africa's most industrialized country in November and December, have warned of downgrades if growth remains weak and Pretoria's commitment to fiscal prudence comes into doubt.

'CORRUPTION IS REAL'

Gordhan told parliament on Wednesday the economy was suffering infrastructure bottlenecks, volatile labor relations, regulatory constraints and red tape, inefficiencies in state-owned enterprises and uncertainties in the policy environment.

Moody's senior analyst Zuzana Brixiova however said on Thursday South Africa would continue to be challenged by slow progress and uncertainty around structural reforms meant to support growth. She also warned that spending pressures were likely to rise in the run-up to the 2019 elections.

In the budget, Gordhan urged public servants to work with integrity, honesty and accountability, a plea his deputy Mcebisi Jonas said referred to rampant corruption in state departments.

"Corruption is real, it's palpable, you can feel it, and you can see it in most agencies," Jonas told the post-budget briefing also attended by Gordhan.

"That's why sometimes Treasury gets the flack. The public finance management act requires that we intervene in institutions and try and correct some of the problems."

(Editing by James Macharia)



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