Godongwana says no Iimminent plan to tap reserves

Finance Minister Enoch Godongwana played down the likelihood of a decision soon to tap a R497 billion contingency fund held on behalf of the country by the central bank.

“For the moment there is not a deal and there is no pressure on us or the central bank,” he said Tuesday in an interview on Bloomberg Television with Francine Lacqua on the sidelines of the World Economic Forum in Davos. “We’ve got to be very careful, I think we’re prudent on both sides.”

The central bank oversees the Gold & Foreign Exchange Contingency Reserve Account on behalf of the Treasury. The account contains unrealised profit or losses on the reserves that are incurred due to exchange-rate fluctuations and any gains or losses accrue to the government.

Read: SA weighs tapping foreign reserve gains to close funding gap

While the Treasury has refrained from tapping the fund so far, Godongwana last year signalled that it will change course and he has held talks with the central bank and the nation’s creditors to establish the optimal amount to be withdrawn. The money could help contain debt-servicing costs or fund a ballooning state wage bill.

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