Reserve Bank sounds frank warning | Business | M&G

📆 5/31/2019 12:30 PM
📰 mailandguardian

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🔒 Deteriorating government finances, including through its exposure to fragile parastatals such as Eskom, have been singled out by the Reserve Bank as a key risk to the stability of the local financial sector.

Lesetja Kganyago, governor of the Reserve Bank, says a stress-testing exercise last year showed that banks were adequately capitalised.

In its latest financial stability review, released on Wednesday, the Reserve Bank said the “state of government finances, and the sustainability of government debt in particular, remains a risk to the stability of the domestic financial system and is one of the main potential determinants of further sovereign credit rating downgrades”.

It noted that support for the country’s troubled SOEs added to the pressure on the state’s budget, already weighed down by rising government spending and lower revenue collections, which have put pressure on government debt metrics.

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