Exchange control stupidity
28 September 2015
Posted by: Author: Michael Heath
Author: Michael Heath (Moneyweb)
The standard argument from National Treasury about exchange controls is basically as follows: ‘We don’t have enough foreign exchange reserves so they can’t be abolished – so we’ll do nothing (except up a few limits every few years). The debate therefore goes nowhere.
My question is: Even accepting that National Treasury feels that exchange controls can’t be abolished, why does no one in the National Treasury or the South African Reserve Bank (Sarb) seem interested in meaningful administrative reform and cutting red tape while we wait for our reserves to increase?
You would probably think from the representations made by the exchange control authorities to the High Court, the Supreme Court of Appeal and the Constitutional Court over the last two years that very high-powered complex financial issues are at stake – as well as the country’s economic viability as a whole. It has been argued up to Constitutional Court level that the National Treasury and the Sarb absolutely must have this kind of power and that is reasonable to have this even in a constitutional democracy such as ours.
You’d be forgiven for thinking that the senior management of the Financial Surveillance Department and the National Treasury are spending most of their time and effort formulating macro policies and considered procedures (taking economic realities into account), auditing the balance of payments reporting data and performing inspections of the authorised dealer’s Treasury/dealing rooms.
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This article first appeared on moneyweb.co.za.