NEWS

Gigaba Admits Knowing About S&P Despite His Earlier Statement That The Reshuffle Won't Cause A Downgrade

New Finance Minister Gigaba told surprised journalists he had known the news since Friday, and admitted the reshuffle played a central role in the decision. 

04/04/2017 13:09 SAST | Updated 04/04/2017 14:56 SAST

New Finance Minister Malusi Gigaba said on Tuesday he know about S&P's intention to downgrade South Africa to junk status thanks to the Cabinet reshuffle as early as last Friday.

This was despite a statement made to journalists on Monday, hours ahead of the downgrade announcement, that the Cabinet reshuffle by President Jacob Zuma in the early hours of Friday morning would not result in a downgrade.

"There's so much more going on in our country for us to believe that changing a single individual can cause a ratings downgrade," said Gigaba on Monday.

On Tuesday, however, following the announcement of the downgrade, Gigaba told surprised journalists that he knew the news since Friday, and it was clear from his comments he believed the reshuffle played a central role in the decision.

Gigaba was reluctant to discuss the reasons given to him for the downgrade but did say: "In general terms, these were issues related to our appointment, performance of the economy, policy issues and the changes that have taken place in the executive. But I think that is generally enough without getting into the details."

He said he could not reveal the information earlier as it was confidential.

Gigaba pointed out that he mentioned speaking to Fitch and Moody's in his Saturday briefing, but not S&P.

"Because when I walked into the office on Friday, they had already made their decision," said Gigaba. "They did afford us the courtesy of informing us, so on Friday already when I arrived the decision had been made and we felt that at that point it was not necessary to talk to them because we were not going to change the decision. But we are intending to talk to them going forward."

He added later in the briefing that S&P was "water under the bridge... it had passed".

"We [initially] decided to talk to the ones who had not made their decision. We have an intention to talk to S&P going forward."

Gigaba said he would be meeting with S&P but the details had not been finalised, and that he would announce them when they were. He also said there were plans to "lead a delegation to meet the ratings agencies and some of the banks", and said he would give details of the delegation when it was finalised.

Zuma wielded an axe to his Cabinet just after midnight on Thursday, appointing 10 new ministers and 10 new deputy ministers. Five ministers and three deputies lost their jobs while others received new portfolios.

The most controversial but expected of these was the replacement of Pravin Gordhan with then-Home Affairs Minister Malusi Gigaba as finance minister: a Zuma loyalist who is also perceived to be close with the controversial Gupta family, who are at the heart of accusations around state capture.

Asked on Tuesday if he met the family, he said: "I'm sure many of you have," he said to journalists. "The same applies to me. I've met a number of business people at various places for a variety of reasons. Meeting somebody doesn't mean they have an impact on your decisions. Ultimately I take my own decisions. I think by now you should know this."

"I have been invited a couple of times to Diwali celebrations as I have attended religious and cultural events at the home of other business people. Those things don't impact on my ability to take credible decisions on my work," he said.

Axed ministers Gordhan and Derek Hanekom, former minister of tourism, said they were not informed of the decision to fire them and found out via the media.

Sources told Huffington Post South Africa last week of the last minute deals that others tried to strike to get Zuma to back down — unsuccessfully in the end. A source close to one of the ministers being sworn in on Friday said the minister only found out about their appointment after 10pm on Thursday.

Curious charges hung over Gordhan's head for months, until they were finally dropped in October last year, leading to rumours that the charges were trumped up to be used by Zuma as a premise for sacking the finance minister.

But the speculation reached fever pitch on Monday when Zuma instructed Gordhan and Jonas to return home from an international investor roadshow. He gave no reasons for the instruction, in a terse statement, but it was widely reported as down to an intelligence report, the so-called "Operation Checkmate" document. The report claimed that Gordhan and Jonas planned to meet foreign businesses to discredit Zuma and that was the reason for their recall from the overseas trip, according to reports.

Following the reshuffle there has been widespread condemnation for the move, including from within the ruling party itself. Senior ANC leaders like deputy president Cyril Ramaphosa and chief whip Jackson Mthembu particularly took issue with the decision to remove Gordhan over the intelligence report. Cosatu on Tuesday also called for Zuma to step down.