LETTER: Greylisting requires urgent attention

The SA Reserve Bank raised alarm bells last week regarding the threat of secondary or indirect sanctions being imposed as a result of our recent foreign policy decisions (“Bank flags frightening new possibilities”, June 2). A sudden halt to capital inflows and increased outflows could threaten the stability of our financial system if our ability to make international payments in dollars becomes impeded as a result.

The warning came after the recent delivery of National Treasury’s budget vote for 2023/24, which also drew attention to a number of factors affecting the continued — and sustainable — growth of the SA economy. Finance minister Enoch Godongwana touched on inflation, the persistence and severity of load-shedding, as well as the downside to our fiscal outlook. Still he ignored a number of critical factors that also require urgent attention. 

Of particular concern, and closely related to the Bank’s outlook, is SA’s greylisting with the Financial Action Task Force (FATF). While Godongwana has allocated more than R265m in (additional) funding to the Financial Intelligence Centre, to assist in their effort to implement the FATF’s recommendations, it will do little to address the continued reputational and economic impact of myopic foreign policy decisions.

Claiming victory after we’ve frozen assets of entities linked to Isis, the Taliban and al-Qaeda doesn’t inspire much confidence, especially when we continue to cosy up to other violent regimes. 

We have already fallen out of favour with many offshore investors; foreigners now 25% of local government bonds, down from as much as 42% in 2018. The rand also touched a record low last week, weakening to R19.86/$. Shortly afterwards the Bank issued another statement, detailing its plans to prepare for a national grid collapse.

If we want to continue growing the SA economy with increasing levels of foreign direct investment, capital and revenue, while maintaining the value of our (already) resilient financial infrastructure, we simply must prioritise plans to end our energy crisis; all the while taking a more disciplined approach on issues affecting our country’s reputation in the global political and economic arena. 

Simryn Andhee
Quantitative investment analyst, Ion Capital 

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