DA shadow minister of finance, David Maynier, has warned that Malusi Gigaba’s new economic advisor will be used as a battering ram in battles with National Treasury.
The Sunday Times reported that the finance minister’s new economic adviser – an economics professor from the University of the Witwatersrand – aims to puts banks, insurance companies and mines at the forefront of radical economic transformation.
Gigaba said last week that he would meet with ratings firm Moody’s to convince them the country would stay on the path of fiscal discipline, to avoid a third credit downgrade, according to a report by Reuters.
“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.
Gigaba’s replacement of Pravin Gordhan in a cabinet reshuffle triggered credit downgrades to sub-investment by two of the world’s biggest rating agencies S&P Global Ratings and Fitch.
Ratings agency Moody’s said that it would be monitoring the situation in the country further before issuing its rating at a later date.
However, Gigaba may be met with some resistance, as his first act of finance minister was to announce that radical economic transformation was at the top of his agenda.
The DA’s Maynier said that Gigaba’s appointment of Professor Malikane as his economic advisor should come as no surprise in South Africa.
He said that the minister set out his political agenda in his maiden press conference on 01 April 2017, which includes: transforming the economy by implementing “radical economic transformation”; and transforming National Treasury because it is dominated by “orthodox economists, big business, powerful interests and international investors”.
“The appointment of Professor Chris Malikane, who appears to have been trained at the “Hugo Chavez School of Economics”, is entirely understandable and a logical consequence of the minister’s political agenda, to implement “radical economic transformation” and to take on orthodox economists at National Treasury.
“The fact is that Professor Chris Malikane has been appointed precisely because he is an unorthodox economist and he will be used as a ministerial battering ram in coming battles with orthodox economists at National Treasury,” Maynier said.
“In the end, Professor Chris Malikane’s appointment will reinforce the perception held by the ratings agencies that there will be major shifts in economic policy, which will shake investor confidence and contribute to a ratings downgrade of South Africa.”