The National Assembly on Tuesday passed the Gold and Foreign Exchange Contingency Reserve Account (GFECRA) Defrayal Amendment Bill, which will allow the National Treasury to draw R150 billion from the GFECRA to reduce borrowing costs over the next three years.
The bill was introduced in Parliament in February when Finance Minister Enoch Godongwana tabled the 2024-25 budget.
Godongwana said at the time the account balance had grown to over R500bn over the years because the rand had depreciated over time.
In its report, the standing committee on appropriation said the bill captured losses and profits on certain foreign currency transactions, protecting the SA Reserve Bank from currency volatility.
It said the SARB Act established GFECRA and empowered the finance minister and the governor to settle balances by mutual agreement and required such balances to be paid into the National Revenue Fund.
“The last settlement of balances in this account was reached in 2003, to the value of R28bn in favour of the SARB. The value of the account has since then grown to over R500bn due to significant rand depreciation.”
It said the amendment to the GFECRA Act provided for direct charges against the National Revenue Fund for the Contingency Reserve Account of the SARB.
“It also provides for a reporting of such funds, informed by a New Settlement Agreement between the Minister of Finance and the SARB Governor.”
Committee chairperson Sfiso Buthelezi said the governing party supported the bill.
Buthelezi also said the legislation allowed the minister and the governor to set a positive balance in GFECRA by mutual agreement and that they have agreed on a framework to manage.
He said GFECRA was an account of the government managed by SARB.
“In 2003, when the account was in deficit, the government credited it with R28bn. When there is more money, there is no harm in taking our money,” Buthelezi said.
He stated that the bill established rules on how to deal with excesses in the account in future.
DA MP Ashor Sarupen said the bill demonstrated the government has run out of other people’s money.
He said the account was a financial instrument held by SARB to provide a buffer against unexpected financial crises.
“Depleting these reserves for immediate short-term government expenditure can only have negative long-term consequences for the economic resilience of our country and the stability for this country to withstand future financial crises.
“Once these reserves are spent, there is no money to replenish it,” Sarupen said.
EFF MP Mzwanele Manyi said the measures in the bill should not serve as a permanent feature within the government fiscal framework.
“It is imperative that the government prioritises long-term strategies aimed at fostering sustainable economic growth, which in turn generate revenue and facilitate realisation of strategic objectives without the need for the recurrent intervention,” Manyi said.
ACDP chief whip Steve Swart said by accessing the SARB fund, the ANC used the account to shield itself from consequences of poor policy choices, corruption, wasteful expenditure and bad policy decisions.
He said the appetite to raid the reserve funds was a dangerous precedent.
“What is to prevent future governments wanting to access the account again and again, raiding the Reserve Bank until there is nothing left?” Swart said.
When the bill was put to a vote only the DA, Freedom Front Plus and ACDP raised their objections.
The bill will be sent to the National Council of Provinces.
Cape Times