Wednesday, February 21, 2024
A combination of high debt servicing costs and a higher budget deficit has led to the introduction of a new reform of the Gold and Foreign Exchange Contingency Reserve Account (GFECRA).
The reform is aimed at mitigating fiscal risks by reducing government borrowing in the medium-term and will allow government to draw down from its GFECRA held at the Reserve Bank.
This was announced by Finance Minister Enoch Godongwana during the tabling of the 2024 Budget Speech held in Cape Town on Wednesday.
GFECRA is a Reserve Bank held account which captures gains and losses on South Africa’s foreign currency reserve transactions and the account has grown to more than R500 billion.
“We will draw down R150 billion of the GFECRA balance once we have ensured that sufficient buffers are available to absorb exchange rate swings and the solvency of the Reserve Bank is not compromised,” he said.
The draw down is expected to result in a decline of some R30.2 billion in government debt servicing costs over the 2024 Medium Term Expenditure Framework (MTEF).
Godongwana explained that national government debt is expected to peak at some 75.3% of the Gross Domestic Product (GDP) in 2025/26 with 2023/24’s budget deficit estimated to worsen to 4.9 % of GDP.
Debt-service costs in 2023/24 have been revised higher, by R15.7 billion to R356 billion.
The Minister said this will require that government stick to its fiscal goals with cuts in expenditure reaching more than R80 billion.
“Debt-service costs will absorb more than 20 % of revenue. To put this into perspective, spending on debt-service costs is greater than the respective budgets of social protection, health, or peace and security.
“A net reduction of R80.6 billion in non-interest expenditure is being implemented over the medium-term. At the same time, revenue has been revised up by R45.6 billion over the medium-term, relative to [the] 2023 MTBPS [Medium Term Budget Policy Statement]. [This is why] we have taken the decision to introduce a reform…GFECRA,” he said. – SAnews.gov.za
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Diary of an Englishman after he moves to South Africa….
**August 1**: Just got transferred with work from London, UK to our new home in Phalaborwa, Limpopo, South Africa. Now this is a town that knows how to live! Beautiful, sunny days and warm, balmy evenings. I watched the sunset from a deckchair by our pool yesterday. It was beautiful. I’ve finally found my new home. I love it here.
**September 1:** Really heating up now. It got to 31 today. No problem though. Living in air-conditioned home, driving air-conditioned car. What a pleasure to see the sun every day like this. I’m turning into a sun-worshipper – no blasted rain like back in London! Had the back yard landscaped with tropical plants today. Lots of palms and rocks. No more mowing lawns for me! Another scorcher today, but I love it here. It’s Paradise !
**October 1:** The temperature hasn’t been below 35 all week. How do people get used to this kind of heat? At least today it’s windy though. Keeps the flies off a bit. Acclimatizing is taking longer than we expected. Fell asleep by the pool yesterday. Got third degree burns over 60% of my body. Missed three days off work. What a dumb thing to do. Got to respect the old sun in a climate like this!
**October 25:** This wind is a bastard. It feels like a giant fucking blow dryer. And it’s hot as hell! The home air conditioner is on the blink and the repair man charged R200 just to drive over and tell me he needs to order parts from @#$# Johannesburg. The wife & the kids are complaining.
**October 30:** The temperature’s up around 40 and the parts still haven’t arrived for the fucking air conditioner. House is an oven so we’ve all been sleeping outside by the pool for 3 nights now. Bleeding R4 million house and we can’t even go inside. Why the hell did I ever come here?
**November 4:** Finally got the fucking air-conditioner fixed. It cost R1,500 and gets the temperature down to around 35 degrees. Stupid repairman. Fucking thief. If one more smart bastard says ‘Hot enough for you today?’ I’m going to fucking throttle him. Fucking heat! By the time I get to work, the car radiator is boiling over, my fucking clothes are soaking fucking wet and I smell like baked cat. Fucking place is the end of the Earth.
**November 9:** Tried to run some errands after work, wore shorts, and sat on the black leather upholstery in my car. I thought my fucking backside was on fire. I lost 2 layers of flesh, all the hair on the backs of my legs and off my fucking behind. Now the car smells like burnt hair, fried bum and baked cat. The Weather report might as well be a fucking recording – hot and sunny. Hot and sunny, Hot and fucking sunny. It’s been too hot to do anything for 2 bleeding months and the weatherman says it might really warm up next week. Fuck!!
**November 15:** Doesn’t it ever rain in this darn place? Water restrictions will be next, so my R5,000 worth of palms might just dry up and blow into the fucking pool. The only things that thrive in this hell-hole are the fucking flies. You don’t dare open your mouth for fear of swallowing half a dozen of the little buzzards!
**November 20:** Welcome to HELL! It got to 45 degrees today. Now the air conditioner is gone in my car. The repair man came to fix it and said, ‘Hot enough for you today?’ I wanted to shove the car up his backside. Anyway, had to spend the R2,500 of the mortgage payment to bail me out of jail for assaulting the stupid fool. Fucking PHALABORWA! What kind of sick, demented idiot would want to live here!
**December 1:** WHAT!!!! The FIRST day of Summer!!!!
You are fucking kidding me, right?