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The Markets React to South Africa’s New Finance Minister

New South African Finance Minister Enoch Godongwana’s heavyweight status within the ruling party could help to build alliances for the fiscal policies championed by the National Treasury, according to Fitch Ratings analyst Jan Friederich. Godongwana, a former labor unionist and close political ally of President Cyril Ramaphosa, was named finance chief in a cabinet shakeup late Thursday after Tito Mboweni resigned. He is the ruling African National Congress’s head of economic policy and a former deputy minister of public enterprises and of economic development. The rand slumped as much as 2.5% against the dollar in the seconds after Ramaphosa announced Mboweni’s resignation on Thursday but pared most of the loss on Godongwana’s appointment. Mboweni was popular among investors for his strong stance on reining in government spending, cutting public-sector wages and support for loss-making state-owned companies, and selling some state assets. The change is unlikely to have an immediate impact on fiscal plans, Friederich, Fitch’s head of Middle East and Africa sovereign ratings, said Friday in an emailed response to questions. “Enoch Godongwana clearly understands the risks from the rise in government debt and is also unlikely to do anything that would jeopardize the credibility of the South African Reserve Bank.”