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