Cabinet gets thumbs up

A resounding thumbs up echoed through the business and financial world yesterday after the news on Sunday of significant changes, reshuffles and new ministerial portfolios in South Africa.

A resounding thumbs up echoed through the business and financial world yesterday after the news on Sunday of significant changes, reshuffles and new ministerial portfolios in South Africa.

The two key appointments of Finance Minister (Pravin Gordhan) and National Planning head (Trevor Manuel) were the most soothing, as was the appointment of former Health Minister, Barbara Hogan, to Public Enterprises.

Also well received was the news that Reserve Bank governor Tito Mboweni would be serving out the remainder of his term under the new administration.

And why were these appointments so well received? Because they send a strong signal that there will not be rapid or radical economic policy changes, but rather a move to delivery and the building of realistic goals in a complex global community.

South Africa's ratings outlook depends on how the country responds to the global economic crisis after largely expected changes to economy-linked posts in a new cabinet, Fitch Ratings said yesterday.

Fitch director Veronica Kalema said economic policy - a key concern for ratings agencies and investors before last month's election - was seen as intact.

It was now watching how the government responded to the global downturn and whether it would do enough to stave off a deep recession.

Fitch rates South Africa as "BBB+" but put it on a negative outlook last year, as did Standard & Poor's, due to a slowing economy and political uncertainty.

Kalema said Fitch was looking at how the government dealt with the crisis through a whole package of measures, fiscal and monetary policy. So far, inflation targeting and a flexible exchange rate had helped adjust to the global shock.

Equity, currency and fixed income markets took the announcement of a new-look cabinet in South Africa over the weekend in their stride, based on early morning trade yesterday.

More effective action plans and actual delivery by government will be well received by business and the markets. It is now up to the new appointees to do just that. - I-Net Bridge, Reuters

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