Jaw-jaw is always preferable to war-war. So it is heartening for the South African economy that its two key protagonists met for an extended discussion yesterday. Topping the agenda would have been conflict over SA Revenue Services and South African Airways, but presumably the Treasury, Eskom, the proposed nuclear programme, Zuma’s jet and State procurement generally were also thrown in. The timing was right, too. Both have been strengthened by recent developments – President Jacob Zuma politically; FinMin Pravin Gordhan by rating agencies – so would have felt sufficiently confident to debate these tricky issues and the best way ahead for the nation, without looking to score political points. Because, when the chips are down, that’s what mature leaders do. How productive of those few hours were – or not – is sure to be exposed through official policy announcements over the next few days. – Alec Hogg
JOHANNESBURG, June 7 (Reuters) – South Africa’s President Jacob Zuma and Finance Minister Pravin Gordhan met on Tuesday to discuss measures to turn around the economy and struggling state owned firms a day before a ratings review by Fitch.
State-owned companies, which Treasury has said have 467 billion rand ($31 billion) in state guarantees, have been singled out by ratings agencies as a major risk to the credit rating of Africa’s most industrialised economy.
South Africa has dodged downgrades from S&P Global Ratings and Moody’s, taking some pressure off Zuma ahead of elections in August and giving policymakers more time to implement reforms to boost GDP growth.
Spokesman for the presidency, Bongani Ngqulunga, said the government will act decisively to rehabilitate loss-making state firms as it did with power utility Eskom.
The power supplier was struggling to keep the lights burning early last year and was forced to implement controlled power cuts that hurt economic activities but has now said it has turned the corner, going without power cuts for about a year.
Presidency: Zuma and #Gordhan discussed what needs to happen over the next 6 months to boost economic growth
— Jacaranda News (@JacaNews) June 8, 2016
“I think you will see the same thing also with other state-owned enterprises, so that is what the minister and the president discussed today,” Ngqulunga said, adding that the meeting lasted four hours.
An analyst said reviving struggling state firms will pose a challenge for Gordhan in his bid to revive their performance.
“This kind of lengthy meeting is probably reflective of the clashes within government on how to deal with state-owned enterprises,” said Daniel Silke, a director at Political Futures Consultancy.
Fitch is likely to affirm South Africa’s investment grade rating but may lower its outlook to negative, analysts said.