the number of unemployed people remained unchanged over this period, resulting in a decline in the official unemployment rate. the official rate measures the unemployed as a percentage of the economically active population. this rate declined from just more than 25 % in october 1998 to about 23 % in october 1999. according to this survey, south africa was therefore able to provide work to its growing population and to reduce the number of unemployed people, even at relatively modest economic growth rates. one should, however, immediately add that a large proportion of the increase in employment took place in the informal sector of the economy, meaning in the segment of the economy that has a low potential for rapid growth. development in the south african economy is currently taking place in low - growth sectors with low fixed investment. at the same time, our savings ratio has declined to about 16 % of gross domestic product. despite the important structural changes that the government has undertaken and the sound macroeconomic policy measures that have been applied, the economy still is not poised to obtain high sustainable economic growth. this objective will require further adjustments to make the country even more investor friendly, to attract direct foreign investors and to counter any negative socio - economic issues. when determining policy, careful consideration is given to factors that could improve the general business mood and investments in south africa. 3. financial stability some people also believe that we need lower real interest rates in south africa if we want to achieve higher fixed investments and sustainably high economic growth. this is, of course, a valid argument. at low interest rates, the user cost of capital is lower and business people would be more inclined to invest their money in risky but probably lucrative capital projects. in this way the fixed investment ratio of the country would be increased, leading to higher growth and more employment opportunities. if only the real world was that simple, how easy my task would be as governor of the reserve bank. unfortunately, it is well known that a lenient monetary policy with low interest rates and the creation of money, does not lead to higher economic growth. the old adage is still true, it is like “ pushing on a string ”. creating more money only leads to higher inflation. if it was so easy to achieve higher economic growth, there would be hardly any poor countries left in the world. i know that i am ridiculing the argument for lower real interest rates. naturally, it is not easy to determine where the correct level of real interest rates should be to achieve high economic growth and maintain

##6. 8 billion in the first seven months of 2000. non - residents ’ net sales of bonds then changed to net purchases of r2. 8 billion in july and august, before they again became net sellers to the amount of r5. 2 billion in september 2000. fortunately, over the same three months, they remained large net purchasers of south african shares on our stock exchange. these purchases amounted to r9. 2 billion, which neutralised their sales on the bond exchange. these substantial fluctuations were recorded in the financial transactions of south africa, despite a fundamentally sound balance of payments position. although the current account of the balance of payments moved into a deficit from the second quarter of 1999, the deficit remained relatively small. throughout 1999 and the first half of 2000 the deficit did not exceed ½ % of gross domestic product, and in the second quarter of 2000 a surplus of r5. 7 billion at a seasonally adjusted and annualised rate was recorded. this surplus was a remarkable achievement taking into account the substantial increase in the country ’ s oil import bill. the bigger bill was due to a rise in the price of oil from about us $ 10 per barrel at the beginning of 1999 to prices in excess of us $ 30 in the first half of 2000. the strong performance of the current account can largely be attributed to the growth in merchandise exports which neutralised increased imports. the favourable economic conditions in the world, a rise in international commodity prices and a competitive exchange rate level in south africa led to a considerable increase in both the value and the volume of exports. as a result of this fundamentally sound balance of payments situation, the gross gold and other foreign reserves of the country have increased substantially. at the end of 1998 the total foreign reserves of the country amounted to r42. 1 billion, which was equivalent to the value of about 10 weeks ’ imports of goods and services. at the end of june 2000 the total foreign reserves amounted to nearly r70 billion, or to 17 weeks ’ imports of goods and services. moreover, the utilisation of foreign credit facilities to boost gross foreign reserves was marginally reduced over this same period, indicating that the reserve bank did not borrow funds abroad to support the level of the foreign reserves. 4. exchange rate of the rand in these circumstances one would have expected the external value of the rand to be strong, and indeed this was the case during 1999. the nominal effective exchange rate of the rand in fact increased by 0. 6 % from the