Good news to the south African Market! The south African government has today, announced its extension of the the National Treasury’s director general Lungisa Fuzile’s tenure in office.
Speaking to Reuters, the National Treasury spokeswoman Phumza Macanda said the contract which was meant to expire by May, had been extended to May 2018 and Minister in the Presidency Jeff Radebe confirmed this at a post-Cabinet media briefing on Friday.
Earlier before the announcement, financial markets raised concern over the fate of Lungisa on whether President Jacob Zuma’s cabinet would extend his tenure or not. This concern was raised in respect to the past incidence where president Zuma fired respected Nhlanhla Nene as finance minister, replacing him with a little known back bencher
“The news helps to end uncertainty over the likelihood of imminent change at the Treasury,” chief economist for Africa at Standard Charted Razia Khan said.
Report has it that Lungisa tenure was extended based on recommendations made by the Finance Minister Pravin Gordhan in order to avoid a repeat of the Nene controversies.
Lungisa was described by economist to be a market friendly person who knows how well to do his job.
“Market preference would be for him to stay because he is very market-friendly and very astute within his role,” Gina Schoeman, he does a good job. We would be surprised if it wasn’t renewed.” an economist at Citigroup in Johannesburg, said via phone conversation on Thursday.
In addition, Isaac Matshego, an economist at Nedbank removing Lungisa at this time when the country’s economy was near junk status, would be another disaster marketers wouldn’t want to experience again.
“At this stage where we are facing a possible downgrade to junk status, this is exactly what we need, you must take into account that market players and these rating agencies are quite familiar with Mr. Lungisa and he is familiar with them too. He knows what they need and how to appease them.”
Lungisa took control of the Treasury from Lesetja Kganyago in May 2011 when the economy struggled to recover from the global financial crisis.
He has overseen the implementation of a spending ceiling and had to steer the nation’s finances during a period in which the rand lost more than 50% of its value against the dollar and South Africa’s credit rating was downgraded to the brink of junk status.
Meanwhile, the chief economist for Africa at Standard Charted Razia Khan noted for ratings agencies it reassures on the ability of the Treasury to execute fiscal consolidation plans, and much more importantly, reinforces perceptions of the strength of the country’s fiscal institutions.”