Business Maverick

South Africa’s Rand Held Back by Political Uncertainty, IMF Says

By Bloomberg 15 April 2019
Caption
A selection of 100 and 200 South African rand banknotes, featuring an image of former South African President Nelson Mandela, stand in this arranged photograph in London, U.K. Photographer: Simon Dawson/Bloomberg

Political uncertainty is probably depressing the value of South Africa rand, according to the head of the International Monetary Fund’s Africa department.

South Africa’s fiscal and monetary policy has been “as good as it gets,” Abebe Selassie said in an interview in Washington. “It’s more on the structural side that attention is needed. It’s more about getting confidence in the private sector to invest.”

While most polls are predicting a comfortable win for the ruling African National Congress under President Cyril Ramaphosa’s leadership in the May 8 general election, he faces difficulties introducing reforms to stimulate the economy, consolidate spending and reduce corruption. Ramaphosa’s rise to power to replace Jacob Zuma after a scandal-ridden tenure of almost nine years initially boosted confidence in the rand, but the currency has slumped back to the levels seen before the change in leadership.

“The rand is of course among the most freely floating currencies in the emerging-market universe, subject to the ebbs and flows of sentiment,” Selassie said. “Our view is that there’s nothing awry with the calibration of macro policies.”

The rand weakened sharply last year as rising interest rates in the U.S. put pressure on emerging markets including Argentina, Turkey and South Africa. The currency has gained about 3 percent against the dollar so far this year.

The IMF this week downgraded its forecast for global growth to the slowest pace since the financial crisis. The fund cut its outlook for South Africa to 1.2 percent growth this year, down from 1.4 percent projected in January.

The fund projects sub-Saharan Africa’s economy will grow 3.5 percent this year, accelerating to 3.7 percent next year. Growth in the region is being held back by the relatively slow expansion in major economies including South Africa, Nigeria and Angola, Selassie said.

“What we see is continued recovery, but it is a two-track recovery amid uncertainty,” Selassie said.

Gallery

Watch Pauli van Wyk’s Cat Play The Piano Here!

No, not really. But now that we have your attention, we wanted to tell you a little bit about what happened at SARS.

Tom Moyane and his cronies bequeathed South Africa with a R48-billion tax shortfall, as of February 2018. It's the only thing that grew under Moyane's tenure... the year before, the hole had been R30.7-billion. And to fund those shortfalls, you know who has to cough up? You - the South African taxpayer.

It was the sterling work of a team of investigative journalists, Scorpio’s Pauli van Wyk and Marianne Thamm along with our great friends at amaBhungane, that caused the SARS capturers to be finally flushed out of the system. Moyane, Makwakwa… the lot of them... gone.

But our job is not yet done. We need more readers to become Maverick Insiders, the friends who will help ensure that many more investigations will come. Contributions go directly towards growing our editorial team and ensuring that Daily Maverick and Scorpio have a sustainable future. We can’t rely on advertising and don't want to restrict access to only those who can afford a paywall subscription. Membership is about more than just contributing financially – it is about how we Defend Truth, together.

So, if you feel so inclined, and would like a way to support the cause, please join our community of Maverick Insiders.... you could view it as the opposite of a sin tax. And if you are already Maverick Insider, tell your mother, call a friend, whisper to your loved one, shout at your boss, write to a stranger, announce it on your social network. The battle for the future of South Africa is on, and you can be part of it.


Comments

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.

Business Maverick

The spectre of stagflation is haunting South Africa and the alternative is also scary

By Ed Stoddard

Adidas will cancel any player's sponsorship deal if it turns out they have anything to do with Scientology.