South African President Jacob Zuma named his second finance minister in four days on Sunday, reappointing Pravin Gordhan following market turmoil that sent the rand to record lows and bond yields to the highest in seven years.
Gordhan was replaced as finance minister 19 months ago. His return ends the brief term of David van Rooyen, a relatively unknown lawmaker who was sworn in as the nation’s fiscal chief on Dec. 10. Gordhan will ensure “adherence to the set expenditure ceiling while maintaining a stable trajectory of our debt portfolio, as set out in the February 2015 budget,” Zuma said in a statement. The rand rallied more than 5 percent against to dollar on the news.
The announcement on Dec. 9 of the removal of widely-respected Nhlanhla Nene as finance minister was met with a barrage of criticism from investors, labor unions, companies, opposition parties and from within the African National Congress itself. Campaigns calling for Zuma to resign or for the ruling party to recall him as leader of the country were staged on social media platforms.
“It may well have been the case that an unprecedented amount of criticism from within the ANC, as well as the gravity of the financial market sell-off, forced a re-think from President Zuma,” Razia Khan, head of Africa economic research at Standard Chartered Plc in London, said by e-mail on Sunday. “Markets will welcome this news, with a strong likelihood that South African assets will rally. However, further reassurances will likely be needed for any deeper, sustained rally in South African markets.”
Gordhan will be sworn in at 10 a.m. on Monday in the capital, Pretoria. Van Rooyen, a former mayor, will head the cooperative governance ministry, under which local governments fall.
“This is positive in the sense it shows Zuma’s power is more constrained than his actions last week suggested,” Peter Attard Montalto, an analyst at Nomura International Plc, said by text message on Sunday. “But it is also very damaging to him and one must increase the probability that he is recalled now.”