Financial analysts have voiced their concerns about president Jacob Zuma’s decision to remove Pravin Gordhan late on Thursday night, noting that the country was now on course for multiple downgrades and a junk status.<\/p>\n
Zuma\u2019s decision to replace Gordhan, who was popular with investors because of his efforts to rein in spending, came in the face of opposition from three of the top six members of the ANC and its alliance partner, the SACP, said analysts speaking to\u00a0Bloomberg<\/a><\/strong>.<\/p>\n \u201cThose walking into the Treasury tomorrow will not reassure anyone that the top institution protecting South Africa\u2019s fiscal stability is in safe hands,\u201d said Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence.<\/p>\n This was echoed by Nicholas Spiro, a partner at London-based Lauressa Advisory who noted that in just over a year, Zuma had fired\u00a0two well-regarded finance ministers.<\/p>\n \u201cUnlike when Nene was fired, the opposition to Zuma within his government is now much stronger, presaging a full-blown political crisis. The rand will be punished even more severely and the whiff of a junk rating is in the air.”<\/p>\n Nomura research analyst, Peter Attard Montalto also believed the move would trigger multiple downgrades across the country.<\/p>\n \u201cThis is an attack\u2026 and will trigger multiple downgrades. As we\u2019ve highlighted before while there are some fiscal risks, we are more worried about Treasury\u2019s role in procurement, preventing corruption, and oversight of SOEs \u2013 including nuclear and banking,” said Montalto.<\/p>\n The rand continued its tumble on Friday, weakening 1.2% to R13.45 against the dollar by 08h55, after slumping 1.9% on Thirsday. It has given up 7.5% aginst the greenback since Monday, the most out of 150 currencies tracked by Bloomberg.<\/p>\n
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