The Fiscal and Financial Commission (FFC) – a statutory body that analyses and provides advice on budget policy – has emerged as one of the sharpest critics of using the Gold and Foreign Exchange Contingency Reserve (GFECRA) to reduce the country's debt.
In a presentation to Parliament's appropriation and joint finance committees from both houses, the FFC warns that the use of R150 billion from the over R500 billion account, which reflects the rising paper valuation of the country's reserves as the rand has depreciated, is a risk to the country and has put it in "weaker strategic position".
The FFC points out that the GFECRA is a "crucial buffer" to insulate the central bank's profit and loss statement from swings in the exchange rate. The GFECRA account – which has reached a balance of over R500 billion based on some $60 billion dollars of gold and foreign exchange reserves due to rand depreciation – "is not a real profit or asset".