These policies consisted of phased reforms—based on social consensus and the constitutional independence of the Reserve Bank—including annual half-a-percentage point of GDP reductions in the fiscal deficit, an eight-year program of trade liberalization, step-by-step liberalization of foreign exchange controls, a four-year program to reform labor law and promote worker training, and public expenditure reprioritization towards the poor.
The NOFP is the net oversold forward book of the Reserve Bank, less net international reserves.
See Section II for a discussion on unemployment and employment issues.
The fiscal year begins April 1. Data prior to 1994/95 are not comparable with those thereafter because the 1994/95 budget changed the methodology concerning the treatment of four of the former homelands (Transkei, Bophuthatswana, Venda, Ciskei). Central government expenditure includes transfers to the provinces and the accrued rather than the cash interest charges; accrued interest data is around ½ percent of GDP higher than cash interest payments (this difference has been rising over time) owing to the sale of government bonds with a lower coupon rate than the prevailing market yield. The data here exclude extraordinary transfers to the Pension Fund and the Gold and Foreign Exchange Contingency Reserve Account, and revenue from the sale of strategic oil stocks.
Rollovers result from underspending, mainly on capital projects, relative to the original budget allocations. The Minister of Finance approves the amounts that may be rolled over on a case by case basis. Generally, rollovers must be spent by the end of the following fiscal year, although rollovers associated with the RDP could in some circumstances be spent over several years (a provision that has now lapsed).
The data show the economic and functional classifications of the Budget plus the changes in the appropriations introduced in the Adjustments Budget, which is presented to Parliament the following February, and includes a distribution by spending ministry of the stock of rollovers from the previous fiscal year. Because the budget data do not include a provision for the expected expenditure of rollovers in the current fiscal year, the economic and functional data that are based on the Budget estimates are not strictly comparable to those based on the preliminary outcome presented in the Adjustments Budget. Further, the economic and functional data that are based on the Adjustments Budget include adjustments for the cash that was transferred to spending ministries, but which was subsequently not spent and was surrendered back to the exchequer account. Accordingly, the data in Appendix Tables 14, 15, and 16 have been adjusted for both surrenders and rollovers to derive the total cash expenditure of the central and provincial governments. Finally, at this time the economic and functional classifications of the 1996/97 budget are available, but not those for the 1996/97 Adjustments Budget.
This amnesty, covering tax arrears prior to March 1994, netted around R 1 billion (0.2 percent of GDP) over the period November 1996 to February 1997.
Given the practice of issuing bonds with a coupon rate that is lower than the market yield (which began in 1980), the interests bill is lower than the cash interest payment. Adjusting for this factor, the annual interest bill (and consequently the cash budget deficit) in 1996/97 would have been 0.6 percent of GDP higher than was recorded, similarly, adjusting the stock of government bonds for the corresponding discount, the debt to GDP ratio at March 1997 would have been 7 percentage points of GDP lower.
As of March 31, 1996, actuarial underfunding of the state pension fund was estimated at around 40 percent of contingent government liabilities, or 10 percent of 1995/96 GDP.
Following the realization of these losses, the balance of the Gold and Foreign Exchange Contingency Reserve Account held at the South African Reserve Bank is increased as is the total debt of the central government. Periodically, this obligation of the central government is regularized through the issue of zero coupon paper to the Bank. The Bank has the right to request conversion of this paper into central government coupon-bearing stock, should the latter be needed for monetary management purposes.
For a description of the current tax system, see Annex I.
The fall in the consolidated banking system’s net foreign assets reflected the loss of foreign assets of the SARB and the considerable accumulation of foreign liabilities by commercial banks.
The CCFF purchase from the Fund in December 1993 is considered a reserve liability.
The members are: Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Tanzania, Swaziland, Zambia, Zimbabwe, and South Africa.
South Africa, together with Botswana, Lesotho, Namibia, and Swaziland, form SACU, which provides for the free movement of goods and the right of transit among member countries. Under SACU, South Africa administers duty collection and distributes shares of the common revenue pool to the four countries according to a revenue-sharing formula.
Anti-dumping measures could not be applied against European subsidized exports under the Uruguay Round agreement.