Forex re­serves will have to be used to fi­nance SA’s im­ports

Finweek English Edition - - Cover -

THE SA RE­SERVE BANK has built up sub­stan­tial for­eign ex­change re­serves over the past seven years. Thanks to an ex­cel­lent mon­e­tary pol­icy and gen­eral stingi­ness with for­eign ex­change re­serves never used to sup­port the rand or fi­nance spec­u­la­tors, the Bank’s net re­serves just kept climb­ing through thick and thin. Bank Gov­er­nor Tito Mboweni has al­ready in­di­cated its re­serves are avail­able for the coun­try’s needs, such as pay­ing for the es­sen­tial im­ports re­quired by the large ex­pen­di­ture on gen­er­at­ing elec­tric­ity. But Mboweni isn’t the only one. Over the past few years, Fi­nance Min­is­ter Trevor Manuel has been able to boast of a sur­plus in the fis­cal ac­count and it’s never re­ally been nec­es­sary for Gov­ern­ment to bor­row money here or over­seas. The State’s to­tal loans are only around 25% of GDP. For­eign loans by Trea­sury are only about 5% of gross do­mes­tic prod­uct. If nec­es­sary, the State could also bor­row over­seas to help Eskom with its im­ports.

Never been nec­es­sary to bor­row. Trevor Manuel Light at the end of the tun­nel? Tito Mboweni

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