Cape Town - South African opposition parties attacked President Jacob Zuma in Parliament over his sudden firing of Nhlanhla Nene as finance minister and the economic turmoil it caused.
A lawmaker from the main opposition party, the Democratic Alliance, said the decision to fire Nene destroyed investor confidence, while the leader of the Economic Freedom Front, Julius Malema, a former Zuma ally, accused the president of increasing the chances that South Africa’s credit rating will be downgraded to junk status.
Zuma’s decision to fire Nene in December and replace him with a relatively unknown lawmaker of the ruling African National Congress sparked a sell-off in the rand and the nation’s bonds. The president backtracked four days later and appointed Pravin Gordhan to the post he had held from 2009 to 2014.
“The decision to fire the minister of finance, Nhlanhla Nene, turned an economic downturn into an economic crisis, and unleashed a firestorm, which destroyed investor confidence in South Africa,” David Maynier, a DA lawmaker, said on Wednesday during a debate on the president’s February 11 State of the Nation Address (SONA). “We are now in deep economic trouble.”
Economic downturn
ANC lawmakers defended Zuma and praised his government for delivering housing and embarking on a programme to build infrastructure. Zuma is due to deliver a reply to the debate on Thursday.
The World Bank has cut South Africa’s growth forecast for this year to 0.8 percent and warned this month that the economy was “flirting with stagnation, if not recession”. Two days later, Moody’s Investors Service said state debt could climb to more than 50 percent of gross domestic product for the first time in more than a decade, as tax revenue slows.
Moody’s cut the outlook on South Africa’s Baa2 credit rating, the second-lowest investment grade, to negative in December. Standard & Poor’s, which puts the nation’s debt one level below Moody’s, also changed its outlook to negative, indicating a possible downgrade to junk.
South African inflation accelerated to 6.2 percent in January, the fastest rate of increase in 17 months, Pretoria- based Statistics South Africa said on Wednesday.
“We are on the brink of a recession,” Maynier of the DA said. “We have spiralling inflation. We are staring at a fiscal cliff. We are facing a debt mountain. And we are at risk of a ratings downgrade.”
BLOOMBERG