State-owned entities will not dictate to government: Gordhan
New finance minister Pravin Gordhan says that it is the government’s duty to earn back the trust of the public.
On Wednesday night, the presidency announced that it had sacked Nhlanhla Nene as minister of finance, replacing him with unknown David van Rooyen.
On Sunday evening however, following massive outcry, the presidency replaced van Rooyen with former finance head, Pravin Gordhan.
“Confidence and trust needs to be earned and sustained. We will stay the course of sound fiscal management. We will maintain fiscal consolidation process,” Gordhan said in his first press briefing on Monday.
“Confidence is not handed on a silver platter, it is earned,” Gordhan said. “Our expenditure ceiling is sacrosanct. Fiscal discipline will remain.”
SAA
It was speculated that Nene was sacked because he refused to grant SAA permission to amend its plane-leasing deal with Airbus earlier this year.
On Monday, the government’s news agency reported Gordhan referencing president Zuma when he said that ‘no State-owned entities will dictate to government’.
The minister said that he would speak with the SAA board in the new year, but would call the SAA chairperson telephonically in the next 24 hours.
He said that SAA was in important flagship for the country, but once it is stabilised, it will be returned to its home. “Treasuries don’t run airlines,” he said.
Notably, Gordhan said that former minister Nene’s decision on SAA still stands, until there is necessity to change it.
He said that it was time that individuals stop playing with state entities as if it is a personal toy.
“We require national reflection as South Africans as how we manage state resources. We are guardians of national resources. We must be responsible,” he said.
Nuclear
Gordhan also spoke about the controversial nuclear build plans, in the country.
Government wants to build several nuclear power plants in the country to provide 9,600MW of energy. Conservative estimates into the costs involved say such a project would cost R500 billion – though experts say it is more likely to spill over R1 trillion in reality.
Gordhan confirmed that the nuclear plan has been approved and that a formal procurement process will begin in accordance to the law.
He warned: “We will not spend money we don’t have.”
The minister promised to maintain fiscal discipline, saying that the state was the guardian of public resources, and must act responsibly in that role.
The position of finance minister has controversially passed through three pairs of hands over the space of four days.
Since markets opened to the new Gordhan had taked up the position, equity markets have recovered 75% of their losses, while currency markets have recovered 50% of their losses, the minister said.
Here is a timeline of events this past week:
Wednesday, December 9, 2015:
- At around 20:00 Zuma issues a statement saying, “I have decided to remove Mr Nhlanhla Nene as Minister of Finance, ahead of his deployment to another strategic position.”
- Zuma announces he has decided to appoint David van Rooyen, an MP and a former mayor of the Merafong local municipality as the minister of finance.
- The president does not provide reasons for his decisions and speculation becomes rife as to why Nene was axed.
- The rand dives in the aftermath of the announcement and goes down 1.39% against the dollar at R14.83/$.
- Opposition parties and analysts criticise Zuma’s decision, while the ruling ANC says the president exercised his constitutional prerogative to appoint a new finance minister.
Thursday, December 10, 2015:
- The rand continues to drop and briefly breaks through R16/$ before recovering to the high R15.70s.
- Consternation grows over Zuma’s decision, while more political analysts and economists predict this could push the country into economic “junk” status.
- Possible reasons speculated for Nene’s axing include because of his reigning-in of South African Airways (SAA) and its chair Dudu Myeni and because of his reluctance on the estimated R1 trillion nuclear deal
- Van Rooyen is sworn-in as the new minister of finance.
- He says following his swearing-in, “As you are all aware, mine is a colossal assignment coming at a time when the global economic outlook is not favourable, more especially for emerging markets… All economic indicators, as you are all aware, are pointing to the south. Now I must undertake in front of you, and the nation, that I will… ensure every policy is directed at creating favourable investment conditions, leading to the development of South Africa for all South Africans – not for the few.”
- Van Rooyen says he would meet his new team at the National Treasury in due course.
- He also says he would start proper engagements with the media and the nation and was planning to make the National Treasury more accessible to “demystify myths” about the department.
- Well-known ANC member Shaka Sisulu breaks ranks and condemns the removal of Nene as finance minister.
Friday, December 11, 2015:
- Calls for President Jacob Zuma to be removed from office top social media.
- #ZumaMustFall trending on Twitter, with many calling on the ANC to recall the president.
- A Facebook #ZumaMustFall event has also been created to announce a peaceful march to the Union Buildings in Pretoria on December 16 at 10:00.
- ANC Youth League president Collen Maine says Nene is not so important that he can cause the rand to plummet.
- “It’s not about Nhlanhla Nene, it’s because of the recession we are in that the economy is not growing… and there are problems with the rand. He might be beautiful to others but he’s not so beautiful that he can make the rand fall,” Maine tells News24.
- President Jacob Zuma speaks out for the first time on the appointment of Van Rooyen.
- Explaining his decision in a statement, Zuma says the “urgency of the changes in the leadership of the National Treasury” was because nominations needed to be sent to Shanghai in terms of the head of the African Regional Centre of the New Development Bank/BRICS Bank, which will be based in Johannesburg”.
- Zuma says Nene had been nominated for the post.
- ANC veteran Barbara Hogan says Zuma has crossed the line and any ANC member worth his or her salt needs to speak out.
- “I certainly believe that if ANC members are worth their salt, they have to start looking very carefully and introspectively… about our roles in this organisation and what we are giving consent to by allowing this president to operate as though he is completely unaccountable,” Hogan tells News24.
- The Presidency rejects reports in the media regarding speculation of a pending Cabinet reshuffle.
Saturday, December 12, 2015:
- Zuma comes to the defense of Myeni, who is also the chair of the Jacob Zuma Foundation.
- The presidency says, “Her relationship with the president is purely professional, and is based on the running of the Foundation…. Rumours about a romance and a child are baseless and are designed to cast aspersions on the president.”
- In a previous interview with News24, Myeni, who is the chairperson of the Jacob Zuma Foundation, said her relationship with the president was professional.
Sunday, December 13, 2015:
- Zuma re-appoints Co-operative Governance Minister and former finance minister Pravin Gordhan to position of finance minister.
- Van Rooyen is appointed co-operative governance minister.
- Zuma says, “I have received many representations to reconsider my decision. As a democratic government, we emphasise the importance of listening to the people and to respond to their views.”
- The rand recovers almost 80c to the US dollar following the announcement – this is a recovery of R15.09/$ from R15.89.
- UDM leader Bantu Holomisa calls for Zuma to be recalled, saying, “It’s clear President Zuma has lost control. He is actually panicking beyond comprehension as we speak.”
- Other opposition parties, such as the Democratic Alliance say Zuma is playing “Russian roulette with the country’s economy”, while the Economic Freedom Fighters says, “Effectively, the country has had three finance ministers in one week… If anyone still does not think we are in a Banana Republic, they cannot be helped.”
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