Republic of South Africa WT/TPR/S/34
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I. THE ECONOMIC ENVIRONMENT
(1) Major Features of the Economy
1. Located on the southern most tip of the African continent, the Republic of South Africa has a
coastline of nearly 3,000 kilometres along the South Atlantic and Indian Oceans and a landmass of
over 1.2 million square kilometres.  In 1997, the population was 37.9 million, of which some 60%
was between 15 and 64 years old, and nearly 51% was urbanized (Table I.1).  The major urbanconcentrations are the Cape Peninsula with Cape Town as South Africa's legislative capital,
Johannesburg/Randburg, Durban/Pinetown, Pret oria (the administrative capital), Port
Elizabeth/Uitenhage and Bloemfontein (the judicial capital).  Some 29% of the economically active
population is unemployed;  this situation results from various factors including a recent increase in the
urban population (spurred by the 1994 political change), the high percentage of the population beingof working age, and a shortage of skilled labour.
Table I.1
Socio economic indicators, 1992-96
Area:  1.22 million square kilometres
Population:  37.9 million in 1997
Urban population:  50.8% of the total
Population growth rate: 2% a year
Life expectancy (years):  64.2
GNP per capita:  US$2,918 in 1996
1992 1993 1994 1995 1996
GDP (US$ billion)a108.4 105.9 108.4 118.7 112.6
Exchange rate (Rand/US$) 2.9 3.3 3.5 3.6 4.3
Share of real GDPa,b,c(Per cent)
Agriculture 4.2 5.1 5.5 4.6 5.7
Mining and quarrying 10.0 10.1 9.6 9.0 8.6
Manufacturing 24.4 24.1 24.1 25.2 24.5
Electricity gas and water 4.6 4.8 4.8 4.8 4.9
Construction 3.2 3.0 2.9 2.9 2.9
Services 53.6 53.1 53.1 53.4 53.5
(Per cent)
Share of employment (as of year end)c
Agriculture, forestry and fishing  ...  ... 11 8 7
Mining and quarrying   ...  ... 8 11 11
Manufacturing  ...  ... 25 28 27
Services  ...  ... 53 53 55
(US$ million)
Exports 23,987 27,129 24,966 28,626 29,120
of which, gold 6,800 7,246 6,668 6,214 6,120
Imports f.o.b. 18,194 18,327 21,481 27,009 27,075
Merchandise trade /GDP (per cent) 35.1 36.3 38.3 41.6 44.9
... Not available.
a At factor cost.
b At constant 1990 prices.c The components may not add up to 100 because of statistical discrepancies.
Source: Data provided by the South African authorities.WT/TPR/S/34 Trade Policies Review
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2. The South African economy is relatively capital intensive, supported by various incentive
schemes including interest rate subsidies and duty concessions on imports of capital goods.  The
capital intensity is compounded by poor labour skills and rigidities in the labour market, which have
resulted in shortages of working capital and high production costs in almost all sectors of the
economy.
3. South Africa is a world leader in terms of both supply and known reserves for a wide range of
minerals.  The mining and quarrying sector, which also supplies inputs directly into manufacturing, is
the backbone of the economy;  it contributes over 8% of real GDP and accounts for more than 40% of
exports.1  Gold is the main mineral export.  However, the share of mining and quarrying in GDP is
down from over 10% in the 1980s, largely due to the de pletion of mineral reserves, gold in particular.
The share of the manufacturing sector in South Africa's real GDP has been around 24.5% since 1992.
4. Under normal weather conditions, South Africa is a net exporter of agricultural products.
Depending on harvests, agriculture contributes between 8 and 10% to South Africa's exports of goods,
and around 5% to its real GDP;  agriculture is also a source of inputs for the manufacturing sector,
mainly food processing industries.  The share of  agriculture in South Africa's GDP has been on a
downward trend since the mid-1980s;  droughts, topog raphical factors and declining investments have
contributed to this decline.
5. Services account for almost 54% of real GDP, with construction contributing a further 3%.
Financial services are a major part of the services sector;  South Africa has a modern financial system
supervised by a constitutionally independent central bank, the South African Reserve Bank (SARB).
In 1996, the services sector was the largest employer in the economy (55% of total formal
employment), followed by manufacturing (27%), mining and quarrying (11%), and agriculture,
forestry and fishing (7%).
6. With a gross national product (GNP) per capita of US$3,160 in 1995, the Republic of
South Africa is an upper-middle-income developing country.2  This level of GNP per capita is
misleading since several decades of apartheid led to a concentration of economic power and very
distorted and unequal income distribution.  Adopted in September 1994, three months after theelections, the Reconstruction and Development Programme (RDP) is aimed at the socio-economic
development of the majority of the population (Chapt er II(3)) and provides the framework for South
Africa's economic policies.  In line with the RD P, the Government has formulated phased and
cautious reforms, based on a social consensus.  Unemployment, basic health care, education, and
housing for the growing population are at the centre of the Government's socio-economic concerns.The effectiveness of socio-economic policies is seen as a central element in efforts to reduce crime
and violence in South Africa.
(2) Evolution of the Economy
(i) Developments up to 1994
7. South African real GDP grew at an average rate of less than 1% a year in the decade
commencing 1985;  this followed ten years of modest growth, of some 2.6% a year.  The
Government's continued use of an import-substitution strategy for much of the period served to raise
                                                     
1The share of the mining and quarrying sector does not include gas, electricity (partially produced from
coal) and water, representing together almost 5% of GDP.
2World Bank (1997).  The 1996 GNP per capita was estimated at US$2,918 by the South African
authorities.Republic of South Africa WT/TPR/S/34
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costs and exacerbate financial constraints.  Corporate profits, savings and investments were negatively
affected, a situation made worse by the tightening of international sanctions in the second half of the
1980's;  there was disinvestment in the latter period.  Hesitant metal prices, particularly gold
(Chart I.1), aggravated the situation and contributed to sluggish export performance.  In addition,
South Africa underwent a severe drought in the ear ly 1990s, such that agricultural output declined by
a quarter in 1992 and manufacturing production wa s down by over 3%.  In 1992, real GDP was down
by over 2% (Table I.2).  A return to a more normal harvest and a pick-up in demand, particularly by
the Government in 1993 and investors in 1994, helped the economy regain modest growth of 1.3 and
2.7% in 1993 and 1994, respectively.
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 19952004006008001,0001,2001,4001,600US$/oz
Rand/ozChart I.1
Average gold price per fine oun ce on the London market, 1984-95
Source :   South African Mining Industry, Statistical Tables, 1995.
8. The Government sought to help local producers by strengthening incentive schemes.  In
particular, the General Export Incentive Scheme (GEIS) was introduced in April 1990.  Also, in
March 1992 the Government reduced the tax burden on local companies, with a slight reduction in therate of corporate income tax;  a value-added tax, at 10% replaced a 13% sales tax.
3  Some
liberalization initiatives were also undertaken, especially in agriculture where a review of the pricing
mechanism, control boards and border measures was started in 1992.4
                                                     
3The rate of the VAT was increased to 14% on 7 April 1993.WT/TPR/S/34 Trade Policies Review
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Table I.2
Recent economic performance, 1992-96
Share of 1996 GDP
(per cent)1992 1993 1994 1995 1996
(Current prices) (Annual percentage change;  at 1990 prices)
GDP at market pricea100.0 - 2.2 1.3 2.7 3.4 3.2
Private consumption 61.0 - 1.4 0.3 3.1 4.7 3.9
Government consumption 20.4 1.9 3.6 3.1 -1.4 6.0
Gross fixed investment 17.2 - 5.3 - 2.8 8.7 10.3 6.8
Inventory investment 1.0 0.2 1.2 1.5  0.7 - 1.2
Exports of goods and nonfactor services 26.5 2.5 4.8 1.0 9.3 7.8
Imports of goods and nonfactor services 25.7 5.3 7.0 16.1 16.6 7.5
(Percentage change)
Consumer pricesb13.9 9.7  9.0 8.5 7.4
Real effective exchange rateb,c1.8 - 4.4 - 3.0 0.2 - 8.3
Nominal effective exchange rateb,c-4.8 - 9.2 - 9.3 - 5.7 - 13.0
Money supply (M3) 8.0 7.0 15.7 15.2 13.6
(Per cent)
Discount rate 14.0 12.0 13.0 15.0 17.0
Ratio of external debt to exports of goods
and nonfactor services 104.8 94.5 95.7 97.4 ...
Gross international reserves (months of imports) 1.9 1.3 1.2 1.4 1.3
(Per cent of GDP)
Government revenue 24.7 25.8 26.4 26.7 27.8
Government expenditure 32.7 32.4 32.2 32.1 33.6
Balance - 8.0 - 6.6 - 5.7 - 5.4 - 5.7
Trade balance 5.3 8.3 3.2 1.4 1.8
External current account 1.5 1.6 - 0.3 - 2.1 - 1.6
Net domestic savings 2.3 3.1 3.4 3.2 3.2
Net domestic investment 0.9 1.5 3.7 5.3 4.9
... Not available.a The components may not sum up to 100 because of statistical discrepancies.
b Period average.
c Negative sign indicates depreciation;  Index:  1990=100.Source: Data provided by South African authorities.
9. Monetary policy was relatively conservative during the period but inflation nevertheless
averaged 14% a year in the decade to 1994;  continued limitations on increases in the money supply
helped bring the rate below 10% by 1993.  The fiscal deficit rose to some 8% of GDP by 1992, bothbecause of increases in administrative, security and social expenditure and because the share of
mining in government revenue fell from over 12 to about 5% in the period 1986 to 1992.  A slight
revenue recovery and expenditure restraint helped to lower the deficit to under 6% of GDP by 1994.
                                                                                                                                                                    
4Foreign pressures and the costs of South Africa's import-substitution strategy had contributed to
intermittent liberalization during the 1970s and 1980s.Republic of South Africa WT/TPR/S/34
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(ii) Recent economic developments
10. Following the 1994 elections and coincident with the conclusion of the Uruguay Round, the
Government adopted certain trade reforms.  In consequence of its Uruguay Round commitments,South Africa bound some 98% of its tariff lines and tariffied agricultural quantitative restrictions.
5  In
addition, a five-year (exceptionally eight-year) trade liberalization programme, with some export bias,was adopted.  The programme is aimed at reducting the overall level of protection on manufactured
and agricultural products, simplifying and rationalizating the tariff structure through the Tariff
Rationalization Process (TRP) and restructuring incentive schemes for local companies.  In line with
the programme, tariffs on a number of inputs and on goods not produced, and without substitutes in
South Africa have been abolished.  However, the effect of the TRP may be to increase escalation andeffective protection for manufacturing.  In line with reform, import surcharges were completely
eliminated in October 1995, and the General Export Incentive Scheme (GEIS), an export subsidy was
abolished on 11 July 1997.
11. Among other measures, the Government adop ted a four-year reform programme aimed at
amending legislation on labour and promoting training:  thus a new Labour Relations Act was enactedin November 1996 and a bill on Basic Conditions of Employment was drafted and released in
early 1997. In keeping with the Government's Rec onstruction and Development Programme (RDP), a
medium-term fiscal plan was adopted in 1994 to reduce public expenditure and reorient it towards the
underprivileged population.  Under the programme, the public deficit (net of borrowing and debtrepayment) was to be reduced by 0.5% of GDP a year, to 3.5% in fiscal year 1998/1999.  Measures
adopted under the programme include:  the establishment of the South African Revenue Service
(SARS);  reduction of the rate of the secondary tax on companies from 25 to 12.5%;  increases in
excise duties, the fuel levy and the rates of estate duty and donations tax;  and the restructuring of
public service, including both a reduction in the number of employees by 300,000 over three yearsand an improvement in conditions of service.
12. Expenditure on RDP projects contributed to a slight increase in the public deficit during the
fiscal year 1996/1997, which at 5.7% of GDP nevertheless remained below its pre-1994 level;  nearly
half of government expenditure was devoted to education, health, welfare, housing and relatedservices.  The situation was exacerbated by the increase in central government expenditure following
the implementation of a three-year civil service rationalization programme from July 1996;  this
provides both termination benefits and civil-service wage increases.  The restructuring of State assets
came under review in 1996;  revenue from sales of such assets partially finances RDP projects.
6  Also,
extraordinary revenue from the sale of the strategic oil stock partially offsets the effect of increases inpublic expenditure on the deficit.  However, the effect of the abolition of incentives such as the
Regional Industrial Development Programme (RIDP) and, more recently, the General Export
Incentive Scheme (GEIS), on public finance is ambiguous since it has been followed by the
enhancement of existing incentives and/or the introduction of new ones.
13. In 1996, several reform programmes were reformulated and actions were taken to improve tax
and duty collection.  In April 1996, the Inland and Customs Revenue Services were merged into the
autonneneomous South African Revenue Service (SARS).  The number of international airports
clearing cargo is to be reduced from 35 to ten (if the identified airports meet the regulatory criteria set
by the SARS) and the number of commercial bor der posts from 52 to 19.  In addition, various
                                                     
5Except on black tea (Chapter III(2)(iii)(b)).
6The RDP Office was closed down in 1996.WT/TPR/S/34 Trade Policies Review
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incentive schemes and financial liberalization reforms, including easing of exchange controls and
reduction of taxes on investment earnings, both aimed at promoting exports of more processed
products, were reformulated or strengthened.
14. On 13 March 1995, the Government abolished the dual exchange rate system, and
South Africa now maintains a managed float for the exchange rate of the rand, the national currency.
In this context, the Government is phasing out exchange controls (Annex I.1).  In 1996, political andeconomic uncertainties were factors in the depreciation of the average nominal and real effective
exchange rates of the rand by 13 and 8%, respectively.  The extent of the depreciation and the release
by the Government of its medium-term macr oeconomic strategy on Growth, Employment and
Redistribution (GEAR) on 14 June 1996 (section (4)), helped to bolster investor confidence.
15. Overall, the various reform programmes contributed to an increase in net domestic
investment, which averaged 4.6% of GDP during  the period 1994-96, compared to 0.9% in 1992 and
1.5% in 1993.  Over the same period, real GDP grew  at an average rate of almost 3.1% a year.
In 1996, good weather conditions contributed to a grow th of 29% in agricultural output, a recovery
from the drought induced 15% contraction experienced in 1995;  however, growth in other sectors
slowed, limiting GDP growth to 3.2%, compared to 3.4% in 1995.  An increase in imports, especiallyof capital equipment and intermediate goods, and the decline in gold exports, has contributed to the
deterioration of the current account since 1994.  In 1996, the level of gross international reserves
represented 1.3 months of imports, compared to 1.9 in 1992.
(3) Trade Performance and Foreign Investment
16. Since 1992, there has been an increase in South Africa's share of trade to GDP, from just over
40% to over 50% (Chart I.2).  South Africa typically runs a merchandise trade surplus but this has
contracted since 1994, with import growth outstripping that of exports.  In consequence,South Africa's traditional service imbalance has not been offset, and there have been current account
deficits since 1994.
(i) Trade in goods and services
17. As a result of South Africa's improved economic performance, and the lifting of sanctions,
since 1994 merchandise imports have risen, especially imports of capital and intermediate goods suchas machinery and electrical equipment.  The share of machinery and mechanical appliances in total
imports increased from 27% in 1993 to some 32% in 1994 and 1995 (Chart I.3).  In 1996, the volume
of imports of capital and intermediate goods slowed with the stagnation of manufacturing activities;
the depreciation of the rand contributed to the rise in import value without seriously affecting volume,
the price elasticity of non-oil imports being low in South Africa (-0.85).
7  There was a decline in the
share of capital and intermediate imports in total imports to about 30% in 1996.
                                                     
7S.A.R.B. (1996a) No. 200, June.Republic of South Africa WT/TPR/S/34
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89 90 91 92 93 94 95 1996102030405060(Per cent)Chart I.2
Trade in goods and non-factor se rvices as a percentage of GDP, 
1989-96
Source : South African Reserve Bank, Quarterly Bulletin , June 1997.X/GDP
Z/GDP(X+Z)/GDP
a           X - exports of goods and non-factor services;  Z - imports of goods and non-factor services.a
18. South Africa's exports remain dominated by minerals and mineral products, especially gold.
Agricultural exports have been negatively affected by droughts, particularly in 1992 and 1995.  The
share of non-mineral exports in total exports rose from 48.8% in 1993 to 56.5% in 1995 mainly
because of the increase in exports of manufactured products and the decline in the production of gold.Increases in both volume and prices contributed to the rise in earnings from merchandise exports in
1995 and 1996;  the reintegration of South Africa into the world economy and the resultant increase in
its access to foreign markets also played its part.  The depreciation of the rand, a good agricultural
performance and the coming into production of new export-oriented manufacturing projects such as
Columbus, which produces stainless steel, boosted exports of goods in 1996;  in addition tomanufactured goods, exports of mineral products, such as coal, ferrochrome and nickel, also rose.
8
                                                     
8The price elasticity of exports of manufactured goods are estimated at 1.40;  these products are also
sensitive to international business conditions (SARB, 1996a).WT/TPR/S/34 Trade Policies Review
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Chart I.3
Breakdown of trade, by main commodities, 1993-96
Source : Data provided by the South African authorities.(b) Imports(Per cent)
1993 1994 1995 1996020406080100
Minerals and 
mineral productsProducts of chemical
or allied industriesTextiles Machinery Vehicles OthersOther minerals and 
mineral products
22.8Non-mineral 
products
48.8
Gold
28.4 Gold
23.11993 1995
Non-mineral 
products
56.5
Other minerals and 
mineral products
20.5(a) ExportsRepublic of South Africa WT/TPR/S/34
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19. South Africa's trade (both imports and exports) with Asian and European countries increased
between 1992 and 1995 (Chart I.4);  its exports to African countries have also increased.
Manufactured products, such as machinery, motor vehicles and fertilizers, constitute the bulk of
South Africa's exports to African countries.  South Africa imports raw materials, including
agricultural products (e.g. cottonnene, tobacco, wood and red meat), and minerals (e.g. diamonds and
crude petroleum oils) from Africa.  South Africa exports minerals, mineral products and agriculturalproducts, such as fruit and wine, to developed countries, and imports capital and intermediate goods
from these countries.  Italy, Japan, the United States, Germany and the United Kingdom were the
largest markets for South Africa's exports;  each of these countries bought between 5 and 8% of
South Africa's exports in 1995.  In the same year, the main suppliers of imports to South Africa were
Germany, the United Kingdom, the United States and Japan;  each of them supplied between 9 and16% of total imports.
20. South Africa is a net importer of broad categories of services.  Net payment of investment
income is the principal source of deficit in the services account, with such scheduled payments
accounting for over 55% of the services deficit in 1992 and for around 50% in 1995 (Chart I.5).  The
decline in the share of net income payments abroad in South Africa's services deficit resulted from the
rise in net freight and insurance payments abroad, with the latter rising in line with increased
merchandise imports.  The increase in service payments abroad has not been offset by the rise in net
receipts that has resulted from the surge in international arrivals, both for business and tourism,
especially from outside Africa.
(ii) Foreign investment
21. South Africa's reintegration into the international capital markets and its financial reforms
have contributed to the growing participation of foreigners in its financial markets.  Portfolio andshort-term investments have represented the largest part of capital inflows to South Africa since the
1994 political change.  The short-term structure of capital inflows has enhanced the vulnerability of
South Africa to changes in market sentiment.  Compounded by uncertainties in the South African
foreign exchange market and the depreciation of the rand from mid-February 1996, this structure
favoured large speculative capital outflows in March and April 1996.
22. Foreign direct investment (FDI) into South Africa was some R 59 billion at the end of 1996
compared with about R 21 billion in 1989.  About 80% of FDI into South Africa is from Europe
(Chart I.6).
9  The United Kingdom is the largest single source, followed by Germany and the
United States.  More than 40% of FDI into South Africa was for activity in manufacturing, mainly
food and beverages, motor industry, and electronics and information technology.  The bulk of FDIconsists of equity positions in existing businesses.  FDI in financial and business services represent
some 30% of the total.
23. Outward FDI by South Africa has been mainly , into Europe (Chart I.7), which received 90%
of the total of nearly R 115 billion in 1996, as against some R 33 billion in 1989.
                                                     
9Charts I.6 and I.7 are based on the latest available complete data.WT/TPR/S/34 Trade Policies Review
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Chart I.4
Trade by partner, 1992 and 1995
(Per cent)
Source : International Monetary Fund, Direction of Trade Statistics , Yearbook 1996.Japan
5.7 Africa
7.8
Other
45.81992
ImportsExports
1995
1992 1995United 
States
5.4 Asia
8.8EU12
25.0
Japan
7.3
Africa
9.4
Other Asia
9.2Other
35.0Korea
3.49Other 
Europe
2.2EU15
26.9
United States
6.6
Japan
9.1
Other
 Europe
3.1
Africa
3.7EU12
36.2
Other
14.4United States
12.8
Asia
10.1Japan
9.8
Other 
Europe
3.6United 
States
10.9
Other
11.8
Africa
3.6Asia
15.7Other 
Europe
1.6
EU15
45.2Republic of South Africa WT/TPR/S/34
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1992 93 94 1995020406080100US$4,153 US$4,124 US$3,870 US$4,450
Freight (net) Travel and other transportation (net) Investment income (net)Other (net) (Per cent and US$ million)Chart I.5
Deficit in trade in services, 1992-95
Source :   Data provided by the South African authorities.
(4) Outlook
24. The 1996 macroeconomic strategy on Growth, Employment and Redistribution (GEAR) is
aimed at achieving high export-led economic growth and creating employment on a sustainable basis
and in a stable macroeconomic environment.10  In keeping with the goals set in the Reconstruction
and Development Programme (RDP), the GEAR pr ovides for the pursuance of a tight monetary
policy, aimed at the attainment of long-term stability of the real effective exchange rate and the
reduction of inflation;  fiscal consolidation will also contribute to containing inflationary pressures.
The gradual liberalization of exchange controls will be pursued and tariff reforms will be accelerated.
The restructuring of incentive schemes, tariff reforms and moderate wage increases are aimed atpromoting export-oriented manufacturing activities (with emphasis on labour-intensive industries and
small, medium and micro enterprises) by making them more cost competitive.
                                                     
10 Government of South Africa (1996a).WT/TPR/S/34 Trade Policies Review
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Chart I.6
Origin and sectoral distribution of foreign direct investment into South Africa, 1994
(a) Origin
Europe
80.1
Africa
1.1Other
0.9
Total FDI:  R 36,024 millionNorth and South America
15.7Asia
2.2(Per cent)
(b) Sectoral distribution
Manufacturing
41.3
Finance, insurance, real estate
and business services
30.8Mining and quarrying
5.4
Agriculture
0.9
Wholesale & retail trade
catering & accommodation
18.6Other
3.0a
Total FDI:  R 36,024 million
a
Source :Including construction (53.3%);  transport, storage and communication (43.3%);  and 
community, social and personal services (3.3%).
South African Reserve Bank, Quarterly Bulletin , March 1997.Republic of South Africa WT/TPR/S/34
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Chart I.7
Destination of South Africa's ou tward foreign direct investment, 1994
(Per cent)
Source : South African Reserve Bank, Quarterly Bulletin , March 1997.Europe
88.3
Africa
5.0Other
1.0
Total FDI:  R 74,896 millionNorth and South America
5.7
25. The implementation of the measures provided for by the GEAR strategy is expected to result
in a progressive rise in economic growth to around 6% in the year 2000 (Table I.3).  By maintaining
the ratio of tax to GDP at around 25% and reducing the ratio of real government consumption to GDPfrom nearly 20% in 1996 to some 18% in the year 2000, the authorities intend to reduce the fiscal
deficit to 3% of GDP by 1999.  GEAR envisages an acceleration of employment growth to
409,000 jobs per year (largely in the private sector) in the year 2000.  The volume of manufactured
exports is projected to increase by annual rates of around 10% in the period to 2000.  However,
because of the higher growth rates of imports that would result from economic growth and the related
services payments abroad, the ratio of the external current account deficit to GDP is projected to rise
from around 1.5% in 1996 to around 3% in the year 2000.  A gradual increase in capital inflows,mainly inward FDI, is expected to offset the rise in the external current account deficit.WT/TPR/S/34 Trade Policies Review
Page 14
Table I.3
Macroeconomic projections, 1997-2000
1997 1998 1999 2000 Average
Fiscal deficit (% of GDP) (fiscal year) 4.0 3.5 3.0 3,0 3.7
Import weighted average tariff 8.0 7.0 7.0 6.0 7.6
Average real wage growth, private sector 1.0 1.0 1.0 1.0 0.8
Real effective exchange rate (% change) -0.3 0.0 0.0 0.0 -1.8
Real bank rate 5.0 4.0 3.0 3.0 4.4
Real non-gold export growth 8.0 7.0 7.8 10.2 8.4
Real export  growth, manufacturing 12.2  8.3 10.5 12.8 10.8
Additional foreign direct investment (US$ million) 365 504 716 804 509
GDP growth 2.9 3.8 4.9 6.1 4.2
Inflation (CPI) 9.7 8.1 7.7 7.6 8.2
Non-agricultural formal employment growth 3.0 2.7  3.5 4.3 2.9
External current account deficit (% of GDP) 2.0 2.2 2.5 3.1 2.4
Gross private savings (% of GDP) 21.0 21.2  21.5 21.9 21.2
Source: Government of South Africa (1996), Growth, Employment and Redistribution - A Macro-economic Strategy .Republic of South Africa WT/TPR/S/34
Page 15
Annex I.1  Foreign exchange regime
26. Established in 1961, abolished in 1983 and reintroduced in 1985, South Africa's dual
exchange rate system comprising a commercial and a financial rand was terminated on
13 March 1995.  Since then South Africa has maintained a managed floating exchange rate system,
with no margins in respect of exchange transactions.  The U.S. dollar is the intervention currency.
There are no taxes or subsidies on purchases or sales of foreign exchange.11  South Africa accepted
the obligations of Article VIII, Sections 2, 3, and 4 of the Agreement of the International Monetary
Fund on 15 September 1973.  The South African rand is convertible for external transactions in goods
and services;  restrictions apply to some capital movements and transfers, mainly by residents.
27. For the purpose of exchange control, all countries outside the Common Monetary Area
(CMA), which consists of Lesotho, Namibia, So uth Africa and Swaziland, constitute the non-resident
area and their currencies are foreign currencies;  exchange restrictions do not apply to the other CMA
members (Chapter II(5)(ii)(b)).  Exchange for permitted imports is made available by the authorized
dealers to whom the South African Reserve Bank has delegated some of the exchange licensing
powers that it exercises on behalf of the Treasury.  Exporters and companies must repatriate their
foreign currency earnings within 30 days of accrual.
28. The annual authorized travel allowances are R 80,000 for adults and R 25,000 for children.
Non-residents' access to domestic credit is limited to amounts equivalent to their shareholders' equity.
Currency transfers for investment abroad are limited to R 30 million per project for approved new
investments and to R 50 million to non-CMA members of the Southern African Development
Community (Chapter II(5)(ii)(c)).
                                                     
11IMF (1996).