(Bloomberg) -- South African political parties that last week agreed to form a governing alliance after May 29 elections failed to produce an outright winner are limbering up for a tussle over cabinet positions, as President Cyril Ramaphosa prepares to be sworn in for a new term.

Senior leaders of Ramaphosa’s African National Congress met on Monday to prepare for formal talks on how key posts will be shared in the next administration. While five parties have signed up for the so-called government of national unity, the bulk of posts will go to officials from the ANC and the Democratic Alliance, its biggest rival.

The structure of the next cabinet will be closely watched by investors anticipating an acceleration of economic reforms under a more centrist-leaning government. The rand has strengthened more than 3% so far this month as bonds and stocks have rallied on optimism about pro-growth policy continuity.

The currency gained 0.4% to 18.1965 per dollar by 10:12 a.m. in Johannesburg on Tuesday, while the main stock index jumped 2.3%.

“The new coalition government faces a myriad of economic challenges including sluggish growth, acute unemployment, and fiscal pressures,” HSBC sub-Saharan Africa Economist David Faulkner said in a note. “We think the government of national unity opens the possibility for more growth-friendly structural reforms and prudent macroeconomic policy choices.”

The DA, a centrist party that espouses free-market principles, is eying key portfolios in the economic cluster in the new administration, though they will be opposed by the ANC, according to people familiar with the matter who asked not to be identified as they aren’t authorized to comment. The economy cluster includes the trade and industry, public enterprises and finance ministries.

Inauguration Ceremony

Finance Minister Enoch Godongwana has been sworn in as a lawmaker, making him eligible for reappointment, though he said Ramaphosa has the prerogative to decide whether he retains the portfolio.

Asked on June 14 by Bloomberg if he expected to remain finance minister in the next cabinet, he said: “I can’t answer that question. The president will.”

The ANC is also unlikely to concede to any demands for positions in the security cluster, which includes the police and justice ministries, the people said. It also won’t agree to a DA proposal to issue cabinet posts in proportion to parties’ performance in the election, they said.

Ramaphosa is scheduled to be sworn in at an inauguration ceremony on Wednesday. Bilateral meetings with party leaders will then begin in earnest with a view toward announcing a new cabinet in the coming days.

The president’s previous executive included 30 ministers and 36 deputy ministers. While he’s previously pledged to slim down the cabinet, that plan may be put on hold to accommodate new partners in the government, the people said.

The configuration of the new cabinet will likely “translate into broad policy continuity relative to the previous administration,” Goldman Sachs International Inc. Economist Andrew Matheny said. It will possibly come with “better implementation/execution, given that the ANC will be subject to more checks and balances, and greater accountability being in a coalition,” he said.

Foreign Minister

Under South African law, Ramaphosa may appoint a maximum of two ministers who aren’t members of parliament. One of those positions is expected to go to International Relations and Cooperation Minister Naledi Pandor, the people said. Pandor spearheaded Ramaphosa’s foreign policy initiatives over the past six years, including the expansion of the BRICS economic bloc.

In addition to the ANC and the DA, the Inkatha Freedom Party, the GOOD party, and the Patriotic Alliance have signed a statement of intent to participate in the government of national unity. The five parties account for 68% of the 400 seats in the National Assembly.

The IFP may get a single cabinet post, while the smaller parties will be accommodated in various roles in parliamentary committees, the people said.

The unity government accord prioritizes growing the economy among its 11 focus areas for the incoming administration. It touts fixed capital investment, structural reforms and fiscal sustainability as key objectives.

South Africa’s gross domestic product has expanded by less than 1% a year on average over the past decade — well below what’s needed to maintain living standards for the growing population.

“The election outcome is broadly favorable for the economic and fiscal outlook, compared with the alternatives,” S&P Global Ratings said in a note on Tuesday. “Nevertheless, we expect the government will face an uphill battle to revive growth and maintain fiscal discipline, while navigating the new realities of coalition politics.”

--With assistance from Mike Cohen.

(Updates rand in third paragraph, stocks in fourth, S&P comment in final paragraph)

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