BMF Prez supports call for SARB to buy government bonds – Statement –

The BMF commends and strongly supports Deputy Finance Minister David Masondo’s call to the South African Reserve Bank (SARB) to “temporarily create money to fund the government’s response to the COVID-19 pandemic” and its adverse effects on the economy. Masondo is however, not the only one calling for this measure, several segments of the public have also come forward to call for SARB to print money to finance the country’s fiscal deficits.
The COVID-19 pandemic and the recent economic downgrades by Fitch Ratings and Moody’s to junk status, have worsened the economic woes of South Africa. Key challenges that the country continues to face include poverty, low levels of education and employment, as well as an urgent need for economic growth. According to Stats SA more than half (55.5%) of the population lives below the upper-bound poverty line (R1 227 per person per month). A 2018 World Bank report reveals that 1% of South Africans own 70.9% of the country’s wealth, while the bottom 60% only controls 7% of its assets.
A stimulus of R500 billion was announced by President Cyril Ramaphosa in his address to the nation on further economic and social measures in response to the COVID-19 pandemic while SARB’s response to the COVID-19 crisis has included incentives, interest rate cuts and the purchase of government bonds into the secondary markets.