Hawks Fight With Gordhan Pushes South African Economy Closer To Junk Status
South Africa’s Finance Minister Pravin Gordhan is a man under siege and it is hurting the economy.
While Gordhan was traversing the United Kingdom and the US trying to reassure investors that the country is still good for business despite recent challenges, back at home an elite police force, known as the Hawks, are baying for his blood.
The Hawks, who are charged with the duty to investigate corruption matters in the country, want Gordhan to answer 27 questions sent to him in a leaked letter over a rouge unit at the South African Revenue Service.
During his US-UK roadshow debriefing with the media on Monday, Gordhan said he had through his lawyers responded to the letter asking for more clarification on the issue, but the police unit has said he was playing delaying tactics and they would use their constitutional power against him.
The Finance Minister said in Tuesday Hawks statement was a direct threat to his office and asked his lawyers to prepare an adequate response after the Hawks yesterday said he had missed a deadline to respond to the questions.
The South African rand fell nearly 3 percent early on Wednesday as investors priced in the risk of another change in the Finance Ministry as the standoff between Gordhan and the elite police unit escalates, Reuters reported.
“While the current political wrangling continues to dominate headlines, uncertainty regarding the rand will remain entrenched,” Nedbank said in a market note.
In a few hours officials from the Moody’s rating agency are due to land in the country to investigate whether to downgrade the country’s credit rating.
Moody’s is the only major rating agency still holding South Africa some two notches above junk. Fitch and Standard & Poors are all one level from declaring debt in the Africa’s second largest economy useless.
Enoch Godongwana, the African National Congress (ANC)’s Economic Transformation Commission, said he was getting worried about the impact the fight between the Hawks and the Finance Minister is having on the already battered economy, Eye Witness News reported.
“There is no doubt, even the timing of the issuance in terms of the 27 questions, all of that combined playing in the public space is not helpful,” Godongwana said.
Of even greater concern is the silence from President Jacob Zuma, who has said nothing about the matter up to this time.
“With officials fighting as they are… someone’s got to knock some heads together and say ‘knock it off!’, but that’s not happening at this point,” Stephen Grootes of Eye Witness News told CapeTalk.