Numbers Don’t Lie By Charndré Emma Kippie This past year, all monetary, fiscal and regulatory officials have taken the necessary steps to mitigate the effects of Covid–19 on the South African economy. As a result of the pressures created by the global pandemic, top priority became providing financial assistance to businesses, organisations and employees, as well as lowering the regulatory burden on financial institutions. All steps taken were geared towards bolstering economic activity. In January 2021, the National Treasury and the Reserve Bank finalised the Financial Stability Framework that defines how the Reserve Bank will independently fulfil its financial stability responsibilities in terms of the Financial Sector Regulation Act (2017).
FINANCE SECTOR OVERVIEW
COURSE OF ACTION In order to drive the financial sector during Covid, South Africa’s Prudential Authority – which regulates banks and the broader financial sector – instated an interim relaxation of regulations to ease the pressures which businesses and regulated financial institutions faced. The course of action included: • Limiting the minimum capital and liquidity coverage ratio requirements for banks. • Decreasing capital requirements for loans that banks restructured to assist their customers and guiding banks on the application of expected credit loss provisioning and accounting practices. • Advising banks to refrain from paying bonuses and dividends. • Paying close attention to banks’ operational risk and business continuity to ensure the health and safety of staff and customers. • Extending financial and regulatory reporting timelines for financial institutions affected by strict lockdown restrictions. SA witnessed significant growth, in terms of its gross domestic product (GDP) during the second quarter of 2021. The GDP accelerated marginally from a revised 1.0% (4.2% annualised) in the first quarter of 2021 to 1.2% (4.7% annualised) in the second quarter, despite the strain of the third wave of Covid-19. Additionally, our nation’s trade surplus grew substantially in the second quarter of 2021 — this was a record high.
SOURCES treasury.gov.za resbank.co.za jse.co.za pwc.co.za iol.co.za
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