#Budget2024: SA dips into foreign reserve profits for first time

The government is known for creating many unpronounceable acronyms for its projects and initiatives, and the latest one is GFECRA. It relates to the most significant announcement in the 2024 National Budget. It refers to the government dipping into its profits on foreign reserves for the first time since the dawn of democracy.

The acronym refers to the Reserve Bank’s Gold and Foreign Exchange Contingency Reserve Account, which reflects the foreign exchange “profits” South Africa has earned due to the steady weakening of the rand over the years.

The government wants to withdraw R150 billion of the R507 billion in the account to plug a few fiscal holes. Although many countries do this, it is a slippery slope that must be carefully traversed.

But using this money to pay down debt will improve South Africa’s fiscal position as the total debt-to-GDP ratio is now 74%, much less than the 80% some analysts predicted if Finance Minister Enoch Godongwana sat on his hands.

The only other ‘surprise’ in the budget is that only R1.4 billion was allocated to the NHI, which seems to be a token allocation.

Apart from the GFECRA announcement, there were no real significant announcements, which is good. Positive surprises have been few and far between over the past decade.

Read Moneyweb’s extensive coverage of the budget here.

Regards, Ryk van Niekerk Editor, Moneyweb