ONE does not need to be an economist to understand that investor confidence, usually embodied in the finance minister, runs the capitalist economy. Investors largely pin their hopes of a return on investment on the finance minister, as opposed to government policy. This often becomes evident when the finance minister either resigns or loses his job.
In 2008, for example, the rand dropped 2.5% against the dollar as the news broke that Trevor Manuel and other Cabinet members had resigned following the African National Congress’s (ANC’s) decision to recall Thabo Mbeki as president.
The announcement from the Treasury that Mr Manuel and his deputy, Jabu Moleketi, were willing to serve under the new administration, allayed investor fears and the rand regained some strength.
Seven years later, the rand plummeted to a record R15.38 to the dollar when President Jacob Zuma fired Nhlanhla Nene as finance minister and replaced him with an economic nonentity, Des van Rooyen. When the decision was reversed a few days later and Pravin Gordhan was reappointed finance minister, the rand regained some strength.
However, all of this does not mean Mr Gordhan should be allowed to avoid answering the Hawks’ questions over the alleged formation of an illegal intelligence unit in the SA Revenue Service (SARS) when he was at its head so as to avoid spooking investors. Mr Gordhan’s defiance actually creates more investor fear and puts the country at increased risk of being downgraded to junk status.
Some people question the timing of the investigation, but it started before Mr Gordhan was reappointed. I concede, though, that sending him questions and demanding answers while Mr Gordhan was preparing his budget speech was unfair. Nevertheless, he cannot now use the threat of investor confidence to defy the Hawks indefinitely. Mr Gordhan should answer the questions and account for his role in the unit, if any. The Hawks, acting without fear or favour, should pursue the investigation to the letter. South Africans deserve the truth about the unit.
Ironically, some people are calling on Mr Zuma to intervene in the standoff between Mr Gordhan and SARS commissioner Tom Moyane (pictured) over the restructuring taking place at SARS. The irony is that the same people who accused Mr Mbeki of interfering in the Selebi versus Pikoli standoff want Mr Zuma to do the same now.
Talk about hypocrisy!
Molifi Tshabalala
Mamelodi
Finance Minister Pravin Gordhan. Picture: ARNOLD PRONTO
ONE does not need to be an economist to understand that investor confidence, usually embodied in the finance minister, runs the capitalist economy. Investors largely pin their hopes of a return on investment on the finance minister, as opposed to government policy. This often becomes evident when the finance minister either resigns or loses his job.
In 2008, for example, the rand dropped 2.5% against the dollar as the news broke that Trevor Manuel and other Cabinet members had resigned following the African National Congress’s (ANC’s) decision to recall Thabo Mbeki as president.
The announcement from the Treasury that Mr Manuel and his deputy, Jabu Moleketi, were willing to serve under the new administration, allayed investor fears and the rand regained some strength.
Seven years later, the rand plummeted to a record R15.38 to the dollar when President Jacob Zuma fired Nhlanhla Nene as finance minister and replaced him with an economic nonentity, Des van Rooyen. When the decision was reversed a few days later and Pravin Gordhan was reappointed finance minister, the rand regained some strength.
However, all of this does not mean Mr Gordhan should be allowed to avoid answering the Hawks’ questions over the alleged formation of an illegal intelligence unit in the SA Revenue Service (SARS) when he was at its head so as to avoid spooking investors. Mr Gordhan’s defiance actually creates more investor fear and puts the country at increased risk of being downgraded to junk status.
Some people question the timing of the investigation, but it started before Mr Gordhan was reappointed. I concede, though, that sending him questions and demanding answers while Mr Gordhan was preparing his budget speech was unfair. Nevertheless, he cannot now use the threat of investor confidence to defy the Hawks indefinitely. Mr Gordhan should answer the questions and account for his role in the unit, if any. The Hawks, acting without fear or favour, should pursue the investigation to the letter. South Africans deserve the truth about the unit.
Ironically, some people are calling on Mr Zuma to intervene in the standoff between Mr Gordhan and SARS commissioner Tom Moyane (pictured) over the restructuring taking place at SARS. The irony is that the same people who accused Mr Mbeki of interfering in the Selebi versus Pikoli standoff want Mr Zuma to do the same now.
Talk about hypocrisy!
Molifi Tshabalala
Mamelodi
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