1995 - National Treasury

-2.34-
territories, which does not represent new debt or
imply new debt service commitments, total government
debt is expected to increase by R39,4 billion.
This is an increase of 19,1 per cent on the total
debt on 31 March 1994 inclusive of the TBVC
states and self-governing territories debt. Details
are as follows:
R billion
Financing of the national budget 36,931
Government stock issued to the
Closed Pension Fund 0,046
Revaluation of foreign loans 0,268
Debt of former TBVC states and
self-governing territories 14,093
Foreign exchange forward cover
losses realised by the Reserve Bank 2.192
Total expected increase in debt 53.530
In 1993 Parliament approved legislation authorising
the issue of government stock in respect of the
government's commitments to the Closed Pension
Fund for political office bearers. Government
stock worth R46 million, which included discount
on this stock, was issued as part of government's
remaining commitment to the Fund (see par.
2.2.4).
Estimated net unrealised losses of R268 million on
foreign debt due to currency depreciation are
included in the increase. It is estimated that
realised foreign exchange forward cover losses
incurred by the Reserve Bank will amount to
R2.192 billion in 1994/95. This is in addition to an
outstanding liability of R2.190 billion carried
forward from the previous financial year, which is
already committed as part of public debt.
The Budget Review of 22 June 1994 reported that
certain short and long-term debts of the former
TBVC states and self-governing territories would
vest in the national government when these
territories ceased to exist with the implementation
of the Interim Constitution. An amount of
R14.1 billion in respect of such debt was
incorporated in the Public Debt Register during
the 1994/95 fiscal year. About R6,1 billion of this
amount has already been refinanced by the issue
of securities of the national government on
maturity of debt of the former authorities, such as
project bills, bridging bonds, promissory notes and
zero coupon stock. This also includes foreign
commitments to the amount of R199 million taken
over by the national government due to an
International Court of Arbitration award made
against the former Republic of Transkei on
22 April 1992. An evaluation is in progress to
determine which assets and liabilities of the
former TBVC states and self-governing territories
will in future be vested in the respective new
provinces (see par. 2.4.2).
During the 1995/96 fiscal year, borrowing in the
domestic capital market will take place in those
government stock in which the Reserve Bank is
currently trading actively as well as in a new
government stock maturing in early 2002 and
existing high coupon stock, namely R106 and
R164. Zero coupon stock with variable maturities
will also be available on demand. Following the
success of the first issue of variable interest rate
stock during the 1994/95 fiscal year, the issue of
more of this type of stock will also be considered.
The State Debt Management Committee which is
responsible for the planning, control and management
of government debt will on an ongoing basis
review the State's borrowing strategy for 1995/96
with a view to:
• developing a smooth maturity structure for
State debt;
• maintaining an appropriate mix of
government securities; and
• minimising interest and other expenses
related to government debt.
Turnover on capital markets
The turnover in the bond market during 1994
amounted to about R2 000 billion, of which 57 per
cent represented RSA stock. The Reserve Bank's
turnover in gilts amounted to about R360 billion,
which represented roughly 17 per cent of the total
turnover in gilts and semi-gilts. Although foreigners
bought a net amount of roughly R1,4 billion in
stock during 1994, foreign trades amounted to
only 4 per cent of the total market.
Consolidation of government debt
The Budget Review of 22 June 1994 noted that
the maturity structure of government debt
indicates an accumulation of redemptions scheduled
for certain years. In the 1996/97, 1998/99 and
2000/01 fiscal years, in particular, scheduled re-