The government’s greater reliance on commercial banks for its funding needs is something to watch, though it is not an immediate source of concern for the SA Reserve Bank, which has the tools to act should the situation warrant it, deputy governor Kuben Naidoo said.

In the wake of SA losing its last investment-grade rating in 2020, the proportion of government bonds held by foreign investors has dropped, leaving local lenders to pick up the slack. An economy that shrunk by the most in a century due to Covid-19 and associated lockdowns in 2020 also depressed demand for credit, leaving bank deposits looking for a home, which they found in bonds that are offering attractive yields...

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