South Africa may keep its gold
PA Johannesburg South Africa, worried by balance of payments problems, may use its gold as collateral in the next few months to • raise currency loans and bolster its foreign exchange' reserves, banking sources here said yesterday. With gold trading at below $430 an ounce compared with the record $875 in January, 1980, the world’s largest producer is reassessing its policy on sales, the sources said. They said South African monetary officials, after talks with foreign bankers at the recent International Monetary Fund annual meeting in Washington, are more ready to turn to alternative ways of using the country’s largest earner of foreign exchange, apart from direct sales. For balance of payments reasons, South Africa has been forced to sell virtually all its current gold production although it tends to withhold gold over short
periods when the world market is weak. South Africa has followed a conservative policy on gold marketing and Central Bank officials had said foreign borrowings and trade finance would be used before the bank resorted to gold “swaps” with foreign commercial banks. Banking sources said the Central Bank is now prepared to consider further gold swaps, under which South Africa in effect pledges part of its gold reserves in return for currency loans. During recent visits to Europe, South African monetary authorities negotiated the mechanics of additional swaps, and now it is merely a matter of timing, they said. South Africa had a deficit on the balance of payments in the first half of 1981 of 3170 M rand ($3865M) or about five per cent of Gross Domestic Product, compared with a surplus of 2830 M ($3450M) in 1980.
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Press, 28 October 1981, Page 27
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278South Africa may keep its gold Press, 28 October 1981, Page 27
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