(Bloomberg) -- The South African Reserve Bank will complete the transfer of 100 billion rand ($5.5 billion) of profits on the nation’s gold and foreign-exchange reserves to the Treasury by mid-August, Governor Lesetja Kganyago said.
“As of July 1, 100 billion rand had been transferred to the SARB, and roughly three quarters of the 100 billion rand due to National Treasury this year has already been paid out,” Kganyago told shareholders at the central bank’s ordinary general meeting Tuesday. “We expect to complete the transfers by mid-August,” he said.
South African Finance Minister Enoch Godongwana announced in his February budget that Treasury would restructure reserves held at the central bank to free up 150 billion rand over three years to to reduce debt issuance.
The country’s Gold and Foreign Exchange Contingency Reserve Account, or GFECRA, showed paper profits of 507.3 billion rand as of January — a massive increase from the 1.8 billion rand in 2006 that reflects the South African currency’s slump in value against the dollar.
It’s been reorganized to release the payout to Treasury, with 250 billion rand remaining in the account to shield the country from losses should the rand gain in value, and 100 billion rand being allocated to the central bank to protect its balance sheet from loss.
Other Highlights
- Disinflation path remains uncertain amid lingering underlying inflation components
- Reserve bank sees inflation resting at the 4.5% midpoint in 2025 and 2026.
- Effects of South Africa being gray-listed in 2023 are being felt as foreign counterparts apply greater scrutiny to South Africa’s domestic institutions
- “It is nevertheless imperative that the action items are addressed timeously to avoid long-term negative effects on the economy,” Kganyago says
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