South African Minister of Finance Trevor Manuel has been urged not to wait until the medium-term budget policy statement — scheduled for October — to announce a relaxation of exchange controls.
Official opposition finance spokesperson Raenette Taljaard of the Democratic Alliance said in a statement on Thursday afternoon that important initiatives “should be announced when the market is ready for them — not at grand occasions”.
Taljaard noted South African Reserve Bank Governor Tito Mboweni’s point made recently: “It is wise, when the facts change, to change one’s mind.”
Taljaard said further: “The severe impact of the recent fluctuations of the rand on business activity in South Africa should alert Minister Manuel to the benefits of a clear plan for the relaxation of exchange controls. Numerous studies have shown the benefit of exchange control liberalisation for exchange-rate stability and foreign direct investment.”
Her comments are in stark contrast to those of Congress of South African Trade Unions (Cosatu) secretary general Zwelinzima Vavi, who said earlier on Thursday that exchange controls should remain as they are.
“We can see no better policy mechanism to protect our country from a situation where capital will be moved out of the economy never to return,” Vavi said.
Meanwhile, Taljaard noted that in a parliamentary response Manuel said the government is merely studying the recently released Goldman Sachs report on exchange-control liberalisation.
She said: “This is wholly insufficient when bold action is needed to show the market that government is willing to remove one of the few remaining policy features that will hamper our ability to create a financial centre for Africa in South Africa.
“The debate on whether South Africa should have a strong or weak rand is less significant than the incontrovertible argument that South Africa needs a stable currency. Exchange controls continue to stand in this path.” — I-Net Bridge