Deputy Speaker, it is a matter of grave concern that the Reserve Bank has for the second year in a row posted a huge loss. This year the loss is about R1,2 billion, which follows last year's loss of about R1,1 million.
These losses are motivated by the Reserve Bank's decision to avoid further artificial appreciation of the rand under the action of speculators. By leaning against the market the Reserve Bank is incurring losses, effectively buying rand expensively and selling them cheaply.
It is also incurring losses by "sterilising", as they put it, the effect of this operation by retrieving rand from the marketplace to avoid inflation. The sterilisation account is a government account and these operations are conducted at government cost with taxpayer being finally responsible for the payment of debts caused by the Reserve Bank's strategic failures.
When we met with the Governor of the Reserve Bank, she and her advisers clearly put it to us that it was futile to contain the appreciation of the rand by means of market operations of this nature, yet they are doing exactly that. The appreciation of the rand is destroying our industrial basis and undermining all privately driven efforts to generate employment in this time of crisis.
Two years ago we pointed out that the only sensible and sustainable strategy to deal with the present situation was that of seriously cutting interest rates.
The Reserve Bank admits that the main cause of the appreciation of the rand is the fact that our interest rates are now higher than those of competing foreign countries with similar credit profiles. Foreigners buy our Treasury bills because they have a greater yield. However, we cannot pursue the same financial course. [Time expired.]