CAPE TOWN - The SA Reserve Bank (Sarb) said on Wednesday that SA’s net foreign reserves fell to $42.194 billion (R595.8bn) in October from $42.227 billion (R596.4bn) in September.
The Reserve bank also noted that gross reserves also edged lower, decreasing to $50.166 billion from $50.394 billion.
The forward position fell to $1.347 billion in October from $1.41 billion in the previous month.
Last week, Sarb governor Lesetja Kganyago hailed new Finance Minister Tito Mboweni’s commitment to reduce government’s appetite for borrowing. Kganyago told the South Africa Tomorrow Conference in New York that be backed Mboweni’s views on the reduction of the fiscal deficit.
Kganyago said South Africa needed to ensure that borrowing was productive.
“With rising long-term interest rates, credit rating downgrades and tax increases, the case for fiscal stimulus based purely on spending aggregates are well past its sell-by date,” Kganyago said. “We are clearly well past the point where we could hope to crowd in investment simply by raising spending and boosting demand.”
In his maiden Medium Term Budget Policy Statement (MTBPS) Mboweni indicated a fiscal deficit of 4 percent of gross domestic product (GDP) for the 2017/18 financial year.
Mboweni warned that the country’s debt to GDP that is projected to stand at 58.5 percent in 2021/21 might force the country to seek a bailout from the International Monetary fund if it breaches the 60 percent mark.
Kganyago said the consequence of state capture was a large decline in business and consumer confidence which contributed to investment stagnating over the past five years.
“State capture’ has also been a major factor in our fiscal woes, both because it burdened the state with corrupt and fruitless expenditure, and also because it is seriously undermining its capacity to collect taxes.”
Kganyago said the country could expect better growth in the medium term with investments expected to increase above the current 20 percent mark of the gross domestic product (GDP).
He said a better household balance sheets would also unlock growth and open up a scope for further reforms.
BUSINESS REPORT ONLINE