Pravin Gordhan Calls South African Spending Ceiling 'Sacrosanct'

  • Gordhan returns to finance ministry post held until 2014
  • Rand, bonds surged after Gordhan replaces Van Rooyen

South Africa’s new finance minister, Pravin Gordhan, pledged to respect spending limits and fight corruption.

“We will stay the course of sound fiscal management. Our expenditure ceiling is sacrosanct,” Gordhan told reporters on Monday in Pretoria, the capital, a day after being named finance minister. “New measures are being put in place to contribute to reducing corruption and enhancing transparency and these will be complemented by stern enforcement.”

Gordhan, 66, retook the position after a surprise announcement by President Jacob Zuma late on Sunday, becoming the second new finance chief in four days. The statement capped days of market turmoil, boosting the rand and bonds after investors dumped assets following the Dec. 9 appointment of little-known lawmaker David van Rooyen.

During five years as finance minister from 2009, Gordhan build a reputation for fiscal prudence while steering the economy through the global financial crisis and first domestic recession in 17 years.

The rand fell to record lows against the dollar, euro and pound after Zuma replaced Nhlanhla Nene with Van Rooyen last week, bringing criticism from business groups and from within his own party, the African National Congress. The decision invoked fears the government would abandon its pledge to keep spending and rising debt under control, and came days before the U.S. Federal Reserve is expected to raise interest rates for the first time in almost a decade.

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