Key points

  • The government is eyeing funds in the Reserve Bank’s Gold and Foreign Exchange Contingency Reserve Account (GFECRA) to help fund its rising fiscal crisis. Currently, there is no threat of the government expropriating the SARB’s full reserves to try to address the country’s fiscal crisis, which would raise questions about the independence of the SARB with significant detrimental effects.
  • Nonetheless, the money in the GFECRA account is only accessible if the positions are liquidated, which will require the SARB to use some of its reserves.
  • In the absence of desperately needed structural reform and an ideological shift by the ANC-led government, accessing the GFECRA would provide temporary relief but is not a sustainable solution.


Reset needed as gov eyes unsustainable sources of income

Prior to the tabling of the Medium Term Budget Policy Statement (MTBPS), speculation intensified that National Treasury would bridge its widening budget gap by accessing the SARB’s foreign reserves. Such headlines were misleading because investigations only pertained to funds in the Reserve Bank’s Gold and Foreign Exchange Contingency Reserve Account (GFECRA) and not the SARB’s total assets.

While no such detail was provided in the MTBPS, the head of the Treasury’s budget office, Edgar Sishi, recently indicated to parliament that there is work going on between the SARB and government that is governed by legislation.

Furthermore, the idea to access the GFECRA was not originally the government’s idea. It was one of the proposals to address the budget gap made by the Institute for Economic Justice (IEJ) and by more than 100 self-declared policy experts and civil society organisations in a signed open letter.