Fed has room to raise interest rates
THE ONGOING debacle over social grants took another turn this week when finance corporation Ithala politely denied that it owed the SA Social Security Agency (Sassa) anything.
The Kwazulu-natal-based lender refused to be drawn into the controversy but flatly denied that it owed Sassa more than R1.1 billion in dormant accounts.
The denial come in the wake of Tuesday’s claim by Social Development Minister Bathabile Dlamini during Parliament’s standing committee on public accounts (Scopa) hearings that the department was not in favour of using commercial banks to take over the payment function of social grants as they had behaved improperly in the past.
Dlamini said Standard Bank owed Sassa about R500 million and that Ithala Bank owed about R1.1bn over dormant accounts, including interest held back by both institutions.
Ithala chief executive Peter Ireland said the bank did not have any liability to the social security agency.
“Following the statement made by Social Development Minister Bathabile Dlamini before Parliament’s standing committee on public accounts, Ithala can confirm that it does not owe the South Africa Social Security Agency any money,” said Ireland.
Ithala is a wholly owned subsidiary of the Ithala Development Finance Corporation. The corporation’s core developmental activities are carried out by three strategic units: Ithala Financial Services, Ithala Properties and Ithala Limited.
The corporation’s mission is to drive economic development and empowerment while remaining financially stable.
Sassa and the department have come under increased spotlight over the payment of social grants to more than 17 million beneficiaries because the contract with Cash Pay Services (CPS) ends in just over two weeks.
No new deal has been signed yet.
The department was dealt another blow last week when its director-general Zane Dangor resigned over the Sassa debacle.
The Constitutional Court has since given Sassa until Monday to answer a number of questions about grant payments.
Chief Justice Mogoeng Mogoeng issued the directives on Wednesday.
“Sassa must provide information on who was responsible for deciding that the agency cannot pay grants itself after March 2017, and the date when that person became aware that Sassa could not do so.”
“Any queries pertaining to the allegation of money being owed by Ithala must be directed to either the minister’s office or Sassa,” Ireland said. US STOCKS rose on Friday amid broad-based gains as a stellar jobs report underscored the strength of the economy, potentially giving the Federal Reserve enough ammunition to raise interest rates next week.
Data showed 235 000 jobs were added in the public and private sectors in February, blowing past economists’ average estimate of 190 000. The number of jobs created in January was revised up to 238 000.
The unemployment rate edged down to 4.7 percent, while average earnings rose 0.2 percent in February.
“This report is consistent with an exceedingly healthy labour backdrop and, I think more critically, it’s a number that will embolden the Fed to raise rates in March,” said Tom Porcelli, chief economist at RBC Capital Markets in New York.
The Dow Jones Industrial Average was up 59.56 points, or 0.29 percent, at 20 917.75, the S&P 500 was up 9.47 points, or 0.40 percent, at 2 374.34 and the Nasdaq Composite was up 27.04 points, or 0.46 percent, at 5 865.85.
All of the 11 major S&P sectors were higher, with technology providing the biggest boost.
The odds of a rate hike at the Fed’s meeting next week rose to 92 percent after the report.
Fed Chair Janet Yellen’s conference on March 15 following the two-day meeting will be closely watched for clues on the pace of future rate hikes.
In the 49 days of Donald Trump’s presidency, the Dow Jones Industrial Average broke above 21 000 points and the S&P 500 crossed $20 trillion in market value on bets that he would usher in an era of tax cuts, simpler regulations and higher infrastructure spending.
However, the lack of detail on Trump’s plans has raised questions about valuations and taken the heat off the post-election rally.
The S&P 500 index showed 29 new 52-week highs and one new low, while the Nasdaq recorded 44 new highs and nine new lows. – Reuters