CBL sets monetary policy rate
...from page 17 “This expansion in money supply was a result of an increase in net foreign assets attributable to a pick-up in commercial banks’ other deposits with foreign banks,” said Dr Matlanyane.
“The prime lending rate increased from 10.44 percent in June to 10.69 percent during the third quarter. However, the 91-day Treasury Bill rate remained unchanged at 6.25 percent. The domestic and SA Treasury bill rates remained aligned.”
On the external sector front, she said there was improvement in the third quarter.
“The current account deficit narrowed to 4.8 percent of GDP during the third quarter, after a revised deficit of 7.2 percent of GDP in the previous quarter.
“This positive development is due to an increase in merchandise exports due to the growth in textiles and clothing exports as well as an improvement in diamond exports, while current transfers slowed down as a result of a decline in SACU (Southern African Customs Union) receipts,” Dr Matlanyane said.
“Gross international reserves measured in months of import cover declined to 6.1 months in the third quarter from 6.3 months in the previous quarter, on account of an increase in payments for imports.”
She also noted that government budgetary operations had resulted in a deficit of 6.3 percent of GDP at the end of September 2015 compared with a surplus of 14.9 percent of GDP realised at the end of the second quarter.
“In terms of the outlook, fiscal balance is expected to remain in deficit territory in the next two to three fiscal years, largely attributable to the decline in SACU revenue,” Dr Matlanyane said, adding that the MPC would continue to monitor domestic and international developments and to undertake appropriate policy decisions to ensure that the loti-rand exchange rate parity is maintained.