Pravin confident in Washington

In his first 24-hours in Washington for the spring meetings of the International Monetary Fund and World Bank, Finance Minister Pravin Gordhan exuded confidence and business as usual. He gave no indication of being a man under immense pressure from his political adversaries.

In presentations to two think tanks, the Center for International and Strategic Studies and the Brookings Institution, he described South Africa’s political crisis as the normal workings of a young democracy. He suggested that the Nkandla scandal is being resolved satisfactorily. He said public protector Thuli Madonsela had done her job as she saw fit without interference. He did not comment on the departure of the Gupta brothers for Dubai or his dispute with Tom Moyane, the head of the South African Revenue Service.

Gordhan said South Africa wants foreign investment and a strengthened private sector at home. He said he hoped to involve the private sector in the restructuring of South African Airways and its two subsidiary carriers. He expressed concern about a possible downgrading of South Africa’s to junk status by ratings agencies. Should that occur, he said, borrowing costs would rise, imposing further hardships on consumers.

In his remarks, and in an interview with Moneyweb, Gordhan emphasised that South Africa has a good story to tell. “We have a case to be made,” he said “and people want to hear it.” He referred to the 16% increase in tourism last year and appealed to his audience to consider a South African holiday, benefiting from the cheaper rand.

Asked about the recent rebound in the rand exchange rate to pre-December crisis levels, Gordhan said there is still additional work to be done to restore confidence.
He expressed dismay with the current sluggish performance of the world economy, saying the IMF is constantly downgrading its forecasts. The IMF projects that South Africa will grow by less than 1% this year.

Gordhan expressed frustration with global economic policy saying, “no one seems to know what to do to restore growth and investment.” He said South Africa like other emerging economies is a victim of the 2008 and 2009 financial crisis in Europe and America. “These problems,” he said, “came from your shores and were exported to us.”

As part of a full schedule, Gordhan later Thursday met with finance chiefs of the BRICS countries and attends a dinner meeting of the Group of 20 finance ministers. He said the BRICS bank, technically the New Development Bank, should announce its first loan by the end of the year.

Relaxed and greeting old friends, Gordhan gave every indication that he is delighted to be back at his old post after two years away. Pravin Gordhan in Washington—at least on the outside—is the epitome of the adage, “keep calm and carry on.”

-Moneyweb