Prepared by Trevor Alleyne, Gunnar Jonsson, and Michael Sarel.
There was a substantial revision in the national income accounts for 1993-98. See Box 1 for details.
It appears that there is a discontinuity between pre-1998 and subsequent data. Beginning in the first quarter of 1998, basic data originate from the Survey of Total Employment and Earnings by Statistics South Africa, which replaced 17 discrete monthly or quarterly business surveys.
Data from the 1997 October Household Survey, which takes place annually and provides labor market data on both the formal and informal sectors.
The growth in remuneration per worker should not necessarily be interpreted as reflecting the growth rate of wages. The trends in these two series would be different to the extent that full-time and part-time employment differed (as was the case in this period) and the pattern of overtime pay varied over time.
For example, Andrew Levy and Associates, a South African consulting firm specializing in labor market and industrial relations issues, estimates that wage settlements in 1998 were below 9 percent in 1998, about 1 percent point lower than in 1997.
Privatization receipts Mid revenue from the sale of oil stocks (0.4 percent of GDP in 1998/99) and losses from foreign exchange operations and valuation changes of the Reserve Bank’s gold reserves (1.9 percent of GDP) are excluded from the budget deficit. The latter is included in the calculations for the consolidated public sector borrowing requirement (see below).
Under Section 100(1) of the Constitution, the national government is authorized to intervene in provinces in cases where a province cannot or does not fulfil an executive obligation in terms of either legislation or the Constitution. The Constitution bars provinces from incurring debt unless authorized by the Minister of Finance.
Whereas provinces rely on the transfers from the national budget for 96 percent of their revenue, local authorities are largely self-sufficient, raising most of their own revenue from property and other local taxes, levies, and user charges.
The overall corporate tax rate, which includes the standard rate and the 12.5 percent Secondary Tax on Companies, would fall to from 42.2 percent to 37.8 percent
Turnover in the secondary bond and equity markets together was on average R 403 billion a month in 1997. This more than doubled to R 1,001 billion a month during the turbulent second and third quarters of 1998. Turnover then fell back to on average R 834 billion a month during the first 10 months of 1999, as market conditions calmed down.
As interest rates have been reduced in 1999, there have been some indications of a revival in demand for mortgage advances. This demand might be further boosted with the introduction of new home-loan products in October 1999, which in some cases carry a borrowing cost that is more than 2 percentage points below the prime lending rate.
See South Africa—Selected Issues (SM/98/164) for a more detailed description of the turbulence in the financial markets in mid-1998.
The initial interest rate response was somewhat uneven, as the SARB and market participants were still learning how to manage and interpret the newly introduced repurchase system for providing liquidity to banks (see below).
Gold prices (London market, U.S. dollar terms) declined by 11 percent in 1998 (annual average rate) and by an additional 5 percent in 1999. However, following announcements by the Fund that it would conduct its gold sales off-market and by European central banks that they would limit gold sales and the lending of gold, gold prices rebounded strongly in October 1999, averaging a level that was 20 percent higher than during the third quarter of 1999 (the low point) and 5 percent higher than a year earlier.
South Africa formally accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Articles of Agreement as of 1973.
SM/97/162 contains a discussion of South Africa’s history with exchange controls.