Cabinet praises Gigaba's investor talks, FDI status

Cape Town – Cabinet lauded the successful engagement Finance Minister Malusi Gigaba had with investors and the global finance community in the second last week of April. 

On Friday, newly appointed Communications Minister Ayanda Dlodlo, who replaced Faith Muthambi in an overnight Cabinet reshuffle at the end of March, briefed the media on the outcomes of a Cabinet meeting held on Wednesday April 26. 

Dlodlo said the “successful engagement” between Gigaba and investors during his visit to the US for the International Monetary Fund (IMF) and World Bank spring meetings, reaffirms government’s policy orientation towards “prudent fiscal discipline and stringent consolidation”. 

READ: WATCH: Gigaba's message to concerned South Africa 

Cabinet also reiterated that the goals set out in the 2017 National Budget would remain unchanged. 

During his visit, Gigaba also met with ratings agency Moody’s, which has South Africa on downgrade review, following the Cabinet reshuffle. The agency, which has the country on Baa2 – two notches above sub-investment grade – will be making a decision on South Africa’s sovereign credit rating in the foreseeable future. 

Gigaba earlier said the engagement with Moody’s was “robust and constructive”. He added that the agency will send a team to South Africa in May. 

“We are going to sit down with them and talk further about a whole range of things," Fin24 quoted Gigaba as saying. 

Downgrades ‘not discussed’ 

During question time, Dlodlo was asked if there were any discussions about the recent Cabinet reshuffle which saw among others the removal of Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas and whether the recent credit ratings downgrades by S&P Global and Fitch were a focus.

According to Dlodlo, the new Cabinet ministers were “welcomed” and there were no deliberations on the reshuffle. 

“The ratings downgrades were also not discussed,” she said, “as Finance Minister (Malusi) Gibaba was not in the country.” 

Foreign direct investment (FDI) 

Cabinet also welcomed South Africa’s re-entry into the AT Kearny 2017 Foreign Direct Investment Confidence report, placing South Africa in 25th position. 

South Africa was included in the index – for the first time since 2014 – but was placed last out of 25 countries. 

READ: SA re-enters FDI index, but placed last 

“South Africa made a comeback into the index,” Dlodlo said, which publishes the 25 most attractive investment destinations, for the first time since 2014. It ranks us with other developing countries such as China (3rd), India (8th); Brazil (16th) and Mexico (17).

According to Dlodlo, the ranking shows that South Africa’s strategic partnership with foreign investors is gaining momentum and further demonstrates that the “blueprint on development” is yielding results. 

“Improvements in short-term economic prospects and the long-term investment in the country’s manufacturing sector have been cited as some of the key drivers of South Africa’s improved rating on the index,” she said. 

READ: Mergers and acquisitions to feel the impact of downgrade

Fin24 earlier reported that South Africa’s recent credit rating downgrade to junk status could negatively impact FDI, analysts have warned, as the country could be deemed high-risk as a result of perceived political instability. 

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