CABINET RESHUFFLE FALLOUT
Interest bill has already crept up, but this is still the calm before the storm
Huge inflows into emerging markets have cushioned SA, but there are signs of stress at bond auctions, writes Nazmeera Moola
Reshuffle is such a benign word. It sounds so normal. Unfortunately, President Jacob Zuma’s cabinet reshuffle of March 30 has already had significant economic consequences for SA — and there will be more. Ultimately, those worst hit in the country will be the poor. It has been five weeks since Zuma removed and replaced the finance minister and deputy finance minister. Since then Fitch and S&P Global Ratings have downgraded SA’s hard-currency credit rating to subinvestment grade and Moody’s has put both the local and hard-currency debt on watch for a downgrade. Despite this, SA has thus far appeared to have escaped without serious financial consequences. The rand remains below R14/$. The 10-year government bond yield is only 15basis points higher than it was prior to the cabinet reshuffle. Unfortunately, the calm is only an illusion. There are already serious signs of stress because of the erosion in confidence that the cabinet reshuffle has caused. The calm is entirely dependent on ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.