Investors in South African markets breathed a collective sigh of relief as President Cyril Ramaphosa announced a new cabinet focused on economic growth, ending weeks of uncertainty. The move, which included appointing business-friendly opposition politicians to key ministerial posts, signaled continuity in fiscal policy aimed at curbing debt.
This announcement followed the African National Congress losing its parliamentary majority in the May 29 elections, leading to a broad coalition government involving almost a dozen parties. The presence of opposition parties is seen as a positive step towards addressing state inefficiencies and driving economic growth.
Market reaction was positive, with the rand rallying and government bond yields falling. The FTSE/JSE All Share Index climbed, and the cost of insuring South Africa’s debt decreased. Retaining Enoch Godongwana as finance minister was seen as crucial for domestic markets, indicating a continuation of prudent fiscal policies.
Overall, the new cabinet aims to accelerate economic reforms to revive the struggling economy. With increased accountability and oversight, there is hope for positive changes, although the coalition government’s sustainability remains a concern.