Speech on the Gold and Foreign Exchange Contingency Reserve Account Defrayal Amendment Bill [B7–2024]
Speech by ACDP MP, Steve Swart

Issued by the ACDP Parliamentary Media Office

ACDP cannot support the potential raiding of Reserve Bank buffers until nothing is left

Mar 26, 2024

Chairperson,

The ACDP shares concerns that have been expressed about the usage of R150 billion of the Gold and Foreign Exchange Reserve Account to offset the fiscal deficit.

Chairperson, there’s a saying in Afrikaans that says “benoude katte maak benoude spronge” — in other words, it’s like a cat on a hot tin roof. And so, the ACDP knows that we are in a very desperate financial and fiscal situation and that this is a way to try to alleviate that.

This account houses unrealised profits created by the fall in the value of the Rand in the past decade against the foreign exchange held by the bank. So, the premise is that the depreciating currency benefits this account and therefore should be accessed.

Now, the obvious question is what happens should the currency (as we all hope for) appreciates, and should the Reserve Bank’s reserves drop below the acceptable limit. We hope it would appreciate because then the oil price and other imports will be far cheaper and this will be a stimulus to the economy.

It’s interesting that the Reserve Bank initially argued that R100 billion of the R497 billion in this account tends to be impacted by market volatility and that running down the currencies or the country’s reserve buffers at a time of heightened global uncertainty may not be the best strategy. 

But, we appreciate that the Reserve Bank has now agreed to the proposal and that this settlement has now been reached. However, the ACDP believes that by accessing these funds, the government is using this account to shield it from the consequences of poor policy choices, corruption, and wasteful expenditure. In our view, it’s like selling the family silver.

It is very important for us to also appreciate that it creates a dangerous precedent going forward. What is to prevent future governments wanting to access this account again and again, and then raiding the account’s reserve buffers until there’s nothing left? This, the ACDP will not support.

Lastly, we would like to thank the Appropriations Committee and the Chairperson for their very hard work under very, very difficult and limited timeframes. This needs to be considered in the new Parliament.

I thank you.

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