CAPE TOWN: Faced with political scandals, the South African Reserve Bank (SARB) has decided to raise interest rates 0.25 percentage points to 7% and lower its growth forecast to 0.8%. This is the second time in just three months that the central bank has raised interest rates.
There are fears the political instability could further jeopardise South Africa’s economic standing. President Jacob Zuma is embroiled in a scandal over the influence of the Gupta family, which has allegedly tried to shape political appointments.
At the same time, there are tensions between a special investigative unit of the police and the finance ministry. Both scandals go back to the abrupt dismissal of Finance Minister Nhlanhla Nene in December 2015. Deputy Finance Minister Mcebisi Jonas now claims he was offered the job by the Gupta family, but turned it down. In light of this, the central bank is now trying to maintain South Africa’s credibility with the global markets.
However, the South African Communist Party (SACP), a member of the governing alliance, warns that the Gupta family is currently pushing for another cabinet reshuffle. The plan is to replace the minister of trade and industry with a newly elected business figure.
By doing so, the Gupta family reportedly hopes to gain a stake in ArcelorMittal – the biggest steel producer in the world. The SACP has now called for a judicial inquiry into the Gupta family. Worsening growth prospects might lead to the South African economy losing its credit rating, the Financial Times reports.
