Business leaders opt out of international roadshow with Gigaba

Finance minister Malusi Gigaba will need to convince international investors of his ability to do the job when he embarks on his road show this week, alone, says Dr Azar Jammine, lead economist at Econometrix.

Gigaba will attend the IMF/World Bank Spring meetings in Washington DC on Friday. He will also meet investors in Boston and New York and will try to buy time with ratings agency Moody’s, which has the country on watch for a downgrade.

“We will do all we can to avoid another downgrade and one of the ways to do that is to engage with Moody’s directly, to demonstrate our willingness to stay the course in terms of fiscal discipline and fiscal consolidation,” Gigaba said last week.

Jammine told Talk 702 that Gigabas “got a huge problem in trying to allay skepticism surrounding his stigma associated with state capture and corruption.

“That, I think is probably even more difficult a challenge to overcome as concerns on whether or not he can do the job.”

There are no high profile business leaders accompanying Gigaba on his trip, and according to Jammine, it would have been difficult for the minister to persuade anyone because most would have been against his appointment.

“They worked like Trojans with Pravin Gordhan for over a year to persuade rating agencies not to downgrade us and a Cabinet reshuffle put an end to all their efforts so I don’t think there is much appetite amongst businesses,” he said.

Jamine noted that there would also have been concern among business after Gigaba’s new advisor – Professor Chris Malikane – called for the nationalisation of banks, mines and insurance companies.

On the matter of junk status itself, Jarmine said that currently things aren’t disastrous for the country  – despite a likelihood of a hefty fuel price hike in May.

“The rand is no worse than what it was in February. But if we get further credit downgrades to junk status, then that changes.”

He said that if the minister starts talking about nationalisation, “then all bets are off, we will be downgraded”.

Read: DA warns over Gigaba’s new economic advisor

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Business leaders opt out of international roadshow with Gigaba