Cape Town – The Reserve Bank of South Africa has issued a warning that the government’s stance on the war in Ukraine could result in secondary sanctions being imposed on the country.
Governor Lesetja Kganyago expressed concerns about the geopolitical situation and the prolonged greylisting of South Africa, saying that these factors pose a risk to the country’s financial stability, EWN reported.
Kganyago appeared before Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday to present the Reserve Bank’s findings from its 2023 Financial Stability Review.
This was the first time the central bank briefed the Standing Committee on Finance on its financial sustainability review, which is published twice a year.
South Africa’s membership in the Brics bloc and its regular engagements with Russia make it challenging for the country to appear neutral in its stance on Russia’s war in Ukraine, Kganyago said.
“It would restrict South Africa’s ability to make payments in US dollars. Secondly, there would be a loss of corresponding banking relationships, which means that international transactions become difficult,” the report quoted him as saying.
According to The Citizen, he warned that confusion about the country’s stance might pose a future threat to South African financial institutions’ participation in the global financial system, which increases the likelihood of secondary sanctions being imposed.
“Should this risk materialise, the South African financial system will not be able to function if it cannot make international payments in USD. It could lead to a sudden stop to capital inflows and increased outflows,” said Kganyago.
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Compiled by Betha Madhomu
