JOHANNESBURG, April 4 President Jacob Zuma said
South Africa's fiscal policies will not change and that people
should remain calm after its credit rating was cut to junk
following a political reshuffle that he defended as bringing new
blood into the cabinet.
But moments later, the ANC-allied Cosatu, South Africa's
largest trade union, said Zuma must step down after his change
of finance ministers triggered the credit rating downgrade.
In his first public remarks about Thursday's midnight
reshuffle, Zuma on Tuesday also urged his cabinet to reach out
and reassure international investors following the dismissal of
former finance minister Pravin Gordhan.
Gordhan's sacking has outraged opponents and some political
allies of Zuma, undermining his authority as president, and
threatens to split the African National Congress (ANC) that has
governed South Africa since the end of apartheid.
"With regards to the finance portfolio, we reiterate that
while the political leadership has changed, government’s overall
policy orientation remains the same as derived from the
governing party, the African National Congress," Zuma said.
"We expect the changes to add renewed energy into Cabinet
and the executive as a whole," he said referring to the cabinet
reshuffle, which he said had added "many young ministers".
The departure of Gordhan, a totem of policymaking stability
for many foreign investors whom Zuma thanked on Tuesday for his
service, has rocked the rand currency and other local assets.
His sacking and that of former deputy finance minister
Mcebisi Jonas were also cited by Standard & Poor's as a reason
for its cut in South Africa's credit rating on Monday to BB+,
below investment-grade and implying higher borrowing costs.
The rand, which fell as much as 1.9 percent at the
start of trading on Tuesday, trimmed some losses to trade 0.2
percent lower after Cosatu called on Zuma to step down. The
volatile currency weakened again to trade 0.5 percent lower.
Thanking Gordhan and Jonas, Zuma said his government remains
committed to measured fiscal consolidation that stabilises
rising public debt, but would also aim to radically transform
the economy to include the black majority.
"We thus remain firm in our call that the economy needs to
include the black majority in the ownership and control," he
Zuma urged calm, saying public disagreements within the
government "demoralise our people and create confusion". This
was a "serious weakness and we shall attend to it within renewed
vigour", he added.
But Cosatu said it no longer believed in Zuma's ability to
lead the party and the country, and that it wanted to
restructure its alliance with the ANC.
After S&P announced its rating cut, rival Moody's said it
was reviewing the Baa2 credit rating it assigns South Africa,
two notches above junk, a process that could take 30 to 90 days.
Zuma's dismissal of the respected Gordhan, seen for some
time by pundits as the target of political pressure from a
faction allied to the president, threatens to split the upper
echelons of the ruling ANC.
The sacking has been publicly criticised by half the ANC's
"Top Six" officials, including Deputy President Cyril Ramaphosa
and ANC Secretary General Gwede Mantashe. Zuma, who is also part
of the group of six leaders, has his vote and the support from
the other two members and some groups within the ANC.
(Reporting by Tanisha Heiberg, Olivia Kumwenda-Mtambo, Nqobile
Dludla and Mfuneko Toyana; Writing by James Macharia; Editing by