Finance Minister Trevor Manuel’s 2007/08 budget proposals tabled in Parliament on Wednesday contain further relaxation of exchange controls.
The requirement that South African companies obtain a majority shareholding in foreign entities or projects outside of Africa is abolished, and they now have to obtain only a 25% shareholding.
According to Treasury’s budget review document, this is aligned with the threshold for African investments and will help South African companies engage in strategic international partnerships.
South African companies involved in international trade will now be allowed to operate a single customer foreign-currency (CFC) account for both trade and services, and use it for a wider range of permissible transactions.
This will reduce the transaction costs associated with multi-CFC accounts and their restricted use.
The ”set-off” of an expanded range of transactions within a single CFC account will initially take place within defined limits, which will be reviewed over time.
Further, the Johannesburg Securities Exchange has been granted permission to establish a rand currency futures market, to deepen South Africa’s financial markets and increase liquidity in the local foreign exchange market.
This will enable South African investors to participate directly in the currency market through a transparent and regulated domestic channel. — Sapa