FRIDAY, 5.00PM
LATEST economic and financial projections published by the Reserve Bank on Friday predict a 3% growth rate for 1998/99 — in line with estimates presented in the Budget this week.
Reserve Bank governor Dr Chris Stals told a parliamentary finance committee on the Budget that the Budget will enable monetary policy to be eased this year. “We think interest rates can slowly drift down further this year,” Stals said.
The Reserve Bank also agreed with Finance Department estimates that inflation for 1998/9 should be about 6%.
Stals further welcomed the fact that goverment spending and revenue as a proportion of GDP have declined. Easing government demands on savings means the Bank can be less restrictive in its control of interest rates, Stals said.
BUSINESS BRIEFS
REPO RATE 15% FOR TWO WEEKS
THE Reserve Bank plans to keep the repo rate at 15% for the next two weeks, as part of a policy to actively influence the rate, according to Reserve Bank governor Chris Stals. Stal believes interest rates will probably start drifting down after two weeks. The repo rate, or the rate at which commercial banks borrow from the Bank against government stock collateral, is now the key interest rate determining commercial lending rates.
MINE PROFITABILITY UP
THE profitability ratio — the ratio of net profit after tax to turnover — of South African mines for the fourth quarter of last year increased 3,8% compared to the third quarter, but was down 4% on the fourth quarter of 1996. The profitability ratio for last year was 14%, 4,2% lower than for 1996, according to Central Statistical Service figures. Capital expenditure increased 16,2% in the fourth quarter of last year, after a 6,4% decrease between the second and third quarters.
UNDERSEA CABLES ATTRACT INVESTMENT
TWO high-capacity African undersea cable projects finally seem to have become viable, now that a recent investor meeting has attracted commitments for 79% of the $550-million required for the project. One project, Safe, (SA-Far East) will link Africa with the East, and the other will connect Southern and West Africa. The Safe project began in June 1996. Major players include Telkom, France Telecom, Cable & Wireless, and Telekom Malaysia.
DOUBTS OVER US-AFRICA TRADE BILL
THE United States House of Representatives has endorsed the Africa Trade and Opportunity, but without the numbers needed to give it impetus in the Senate. The bill seeks to give give African countries running liberal socio-economies preferential trade terms. The bill is supported by South Africa, but still has powerful opponents in the US, particularly among textile workers’ unions.
ALEXKOR AND UNIONS ACCORD
STATE-owned diamond mine Alexkor has reached an agreement with unions on productivity and discipline badly needed to turn the company around. Uncertainty over its future has caused low morale, rampant diamond theft and reduced productivity. Government has dragged its feet over deciding the company’s future, but Public Enterprises Minister Stella Sigcau is to visit shortly to discuss related community issues. The company is expected to tender out management and various other core activities of the mine.
EUROBOND INCREASED
DUTCH bBank Nederlands Gemeenten has added R1-billion (equivalent to R39-million in cash) to its December 2025 R2-billion (R78-million) zero-coupon bond issue.
IDC DROPS PRIME RATE
THE Industrial Development Corporation has cut its prime rate-linked variable interest rates by 1%. Its lowest interest rate is now 12,75%. Its new rates are 16,25% for loans below R25-million, and 15,75% for loans above R25-million.
HOMELAND DEBTS TO BE WRITTEN OFF
THE National Assembly has passed a measure passing unfinished homeland development projects to the relevant provinces, and writing off their outstanding debts. Apparently at least R105-million of the debt run up by the former homelands was wasted on building up their militaries.