The joint meeting of the committees of Parliament dealing with public finances expressed mixed views on the use of the Gold and Foreign Exchange Contingent Reserve Account. This follows the announcement by Finance Minister Enoch Godongwana during his Budget Speech that the government will use billions of rands from the Reserve Account to reduce borrowing and debt service costs.
“We will draw down R150 billion of the GFECRA balance once we have ensured that sufficient buffers are available to absorb exchange role swings and the solvency of the Reserve Bank is not compromised,” Godongwana said.
Godongwana announced how government is planning to contain the public debt and ultimately reduce its service costs which consume a large share of the budget at R382. 2 billion.
The Minister faced tough questions from MPs about government’s plan to reduce borrowing by using GFECRA. Some in the opposition were unhappy about this move.
“We do not support what is in effect a bailout from the Reserve Bank’s reserves,” says DA MP Dion George.
The ANC defended the use of the reserves.
“I don’t see any negative effect that this is going to bring to the fiscal outlook. Instead, it is going to bring us closer to our peers internationally and also align with the international best practice. So, if this brings us closer to the peers and aligns South Africa to international best practice, why don’t we welcome that?” says Chairperson of the Standing Committee on Finance, Joe Maswanganyi.
The Ministry says the bulk of this year’s budget ensures that the social wage is maintained and it will achieve a primary surplus. It adds that this ensures staff in critical services including police, health and education are protected.
Video: Budget 2024 – Dissecting govt’s spending plans as debt balloons: Thokozile Madonko
