UNITED DEMOCRATIC MOVEMENT

MEDIA RELEASE

 

CURRENCY DEVALUATION AND DOMESTIC POLITICS

STATEMENT ISSUED BY GERHARD KOORNHOF, MP
UDM SPOKESPERSON FOR FINANCE

The current woes of the rand do not bode well for the South African economy. It places further upward pressure on inflation and could lead to the Reserve Bank increasing interest rates, putting further pressure on South African consumers.

It has been often claimed by the ANC government that domestic policy and politics does not have a direct influence on the value of our currency, as they did repeatedly last year regarding the President’s stance on HIV/AIDS as well as SA policy towards Zimbabwe. Instead, government argued that external factors such as world market volatility were to blame.

Last week, however we saw a surprising about-turn in government’s stance, with a senior government official, National Treasury DG Maria Ramos, blaming an opposition politician for the decline in the rand. If the ANC government is willing to admit that domestic politics does affect our currency, will they accept responsibility for the depreciation of the rand last year? Government officials and politicians often blame the opposition for negative investor sentiment.

Of greater concern to the UDM at this stage, however, is the fall of the rand yesterday to new record lows, before a partial recovery. Considering the government’s belated realisation that domestic politics affect the rand, the ANC must be held directly responsible for yesterday’s currency slide, after media reports on Sunday of ANC plots against President Mbeki. Surely, the ANC must realize that abusing state resources to investigate party matters, and then advertising it in the newspapers will have dire consequences for investor confidence. With each passing day the ANC becomes just as intransigent as the previous regime, stubbornly unwilling to admit that their own policies and attitudes are the primary source of negative sentiment against South Africa.

Enquiries:
Gerhard Koornhof, MP
UDM Spokesperson for Finance

Pretoria
24 April 2001