Saving rates are low - Manuel

Wed, 16 Apr 2008

SA Finance Minister Trevor Manuel said on Tuesday that South Africans' savings rates are low.

He was speaking at a briefing to highlight the importance of savings for the local economy and to discuss the impact of RSA Retail Savings Bonds, an initiative launched by the National Treasury in 2004.

Manuel said that savings "are necessary to ease pressures on the current account as well as the balance of payments".

He added that at present the level of savings in the country stood at just under 14 percent of GDP with households contributing very little towards that savings rate.

Over the next few weeks the Treasury through a media campaign will encourage more South Africans to save using RSA retail bonds.

In the Budget Review of 2003/04, Manuel announced that the Asset and Liability Management Division of the National Treasury would introduce new securities for the retail savings bond market during the first quarter of the 2004 calendar year.

The main objectives of the issue were to create awareness amongst the general public of the importance to save, diversify the financial instruments on offer to the market and target another source of funding.

As these bonds are loan instruments issued by the government to raise funds, they are backed by the credit of the government and are therefore seen as a low risk investment.

The government has on issue two-year, three-year and five-year fixed rate Retail Savings Bonds.

Only SA citizens or permanent residents over the age of 18 are allowed to purchase the bonds.