Sarah Bullen
South Africans can now invest more money offshore after Chris Stals announced a further relaxation of exchange controls this week.
Stals said the ceiling individuals can move offshore has been raised from R400 000 to R500 000, and that travel allowances for individuals will be raised from R100 000 to R120 000. The allowance for people studying abroad has been raised by the same amount. The 15% limit on total assets that companies may invest offshore through asset swaps was, however, not changed.
Stals said it was not necessary to change the R130-billion asset swap limit as companies have so far invested only R60-billion offshore. People will also be able to pay for goods ordered over the Internet with their credit cards, but this will be limited to R20 000 a transaction, and they will still be liable for customs and excise.
The Ministry of Finance has followed a policy of slow relaxation of exchange controls since 1994, when a final debt rescheduling agreement was reached with foreign creditors, bringing to an end the debt standstill arrangements in place under apartheid.
The relaxation in essence signals no change in policy on the part of the Reserve Bank or the ministry, but rather a rand decline adjustment of limits, economists said.
But FCB Fidelity economist Mike Schussler described the move as a “brave step” in light of the volatile international markets. “It is a positive move that South Africa, like many emerging market economies, has not backtracked [in its foreign exchange relaxation],” he said.
Any actual change in the medium-term policy framework concerning relaxation of exchange controls will probably be held off until the next budget.