FCC gives Treasury thumbs up to draw from Gold & Foreign Exchange Reserve Account
The commission said the flipside of this move was that the use of the contingency reserve to the tune of R150 billion would 'weaken' South Africa’s strategic position and capability to stabilise its currency value.
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CAPE TOWN - The National Treasury's decision to draw from its Gold and Foreign Exchange Contingency Reserve Account was given the thumbs up by the Financial and Fiscal Commission (FFC).
However, the commission said the flipside of this move was that the use of the contingency reserve to the tune of R150 billion would "weaken" South Africa’s strategic position and capability to stabilise its currency value.
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The FFC was briefing a joint meeting of the appropriation and finance select committees of the National Assembly and National Council Provinces on last week's 2024 budget.
Minister of Finance Enoch Godongwana announced last week that they would be tapping into the country’s Gold and Foreign Exchange Contingency Reserve Account at the South African Reserve Bank to help service debt.
FFC researcher Chen-Wei Tseng said the R150 billion is not a profit or a positive account and was only due to the depreciation of the rand.
He said, however, that they supported the move.
“As FFC, we are not against drawing down on this account. However, only taking into cognisance that drawing down on this reserve is weakening our strategic position in terms of the world currency and world market.”
Tseng said the commission supported the agreement and conditions in the amendment bill to ensure that the funds would be made available.