South Africa's Gigaba Says He Will Work Within Fiscal Framework

(Bloomberg) -- South Africa's new Finance Minister Malusi Gigaba said he will work within the country's fiscal framework and doesn't plan to remove Treasury Director-General Lungisa Fuzile.

“I will work within the fiscal framework as agreed by government and parliament,” Gigaba told reporters Friday in the capital, Pretoria, after the new ministers and deputy ministers were sworn in following a cabinet reshuffle by President Jacob Zuma. “There will not be any reckless decisions” on spending.

Gigaba succeeds Pravin Gordhan, a favorite of investors who was dumped after months of sparring with Zuma over control of the Treasury, the management of state-owned companies and the affordability of building nuclear plants. Trained as a teacher, Gigaba served as minister of home affairs since 2014 and is a rookie when it comes to finance and business. In his February budget Gordhan pledged to narrow the budget deficit to 2.6 percent of gross domestic product in the year through March 2020, from an estimated 3.4 percent in the 2016-17 fiscal.

Fitch Ratings Ltd. said Friday it may review its assessment of South Africa's creditworthiness after Zuma's move to change the cabinet if it leads to a failure to stabilize debt or for economic growth to recover. Fitch kept its assessment of the nation's credit at the lowest investment grade late last year, while changing the outlook to negative. Moody's Investors Service, which rates South Africa's debt at two levels above junk and with a negative outlook, is scheduled to publish a review of its creditworthiness on April 7.

The Treasury will continue to talk to rating companies and he will speak to S&P Global Ratings, which rates the nation's debt at one level above junk, next week, Gigaba said.

Rating companies have flagged slow economic growth as a risk to the nation's credit assessment. The Treasury forecasts GDP will expand 1.3 percent this year from 0.3 percent in 2016, which was the slowest growth since a recession seven years earlier.

He doesn't plan to remove Fuzile, whose contract was extended for two years in May, and “there will be no reckless changing of the leadership,” Gigaba said.

“There is going to be continuity with regards to the administration,” he said. “I do not come here with an agenda to change the director-general. I support the director-general in the execution of his duties”

To contact the reporter on this story: Arabile Gumede in Johannesburg at agumede@bloomberg.net.

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Andre Janse van Vuuren