South Africa - Current economic position and prospects

RESTRICTED Report No. EA-152a F- This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION I TTT 'T19 T Olat flar1TP TI TrFTT/lar AND PROSPECTS OF SOUTH AFRICA August 3, 1965 Europe and Middle East Department CURRENCY EQUIVALENTS U. S. $1 = Rand 0. 714 Rand 1 = U. S. $1. 4 TABLE OF CONTENTS Page No. BASIC DATA 1 SUMMARY 4 I. INTRODUCTION 6 II. ECONOMIC GROWTH 7 Mining 7 Agriculture, livestock and fisheries 8 Manufacturing 10 Savings and investment 12 Public finances 14 Monetary developments 15 Foreign trade 16 Balance of payments 17 Economic growth and the African 18 III. RECENT ECONOMIC DEVELOPMENTS 21 IV. PUBLIC INVESTMENT AND ITS FINANCING 24 The central government 24 Thp. nnhlin P.nt.prnri-P. 96 V. rOMr.THTTnM 28 APPE0MTYi STArTTTrAT.T6PT.R 1 - 10 BASIC DATA Area: 471,000 square miles Population (1964): 17.5 million of which: Whites: 3.3 million Mivoa rmnp!t 1-7 millin Asians: 0.5 million Africans: 11.9 million Whites: 1.7% p.a. S14 Asians: 2.6% p.a. 390 persons per square mile of arable land. Gross national product (1964): R 7,417 million (includes South West Africa, Swazilana, Bechuanaland and Basutoland). Real rate of growth 940"-04 572 p.a. 1962-64: 7.5% p.a. Per capita G.N.P. (1964): U.S. $590. Net domestic product at factor cost: 1963/64) Percentage Agriculture, forestry, fishing 9.2 Mining 12.5 Manufacturing (private) 27.8 Commerce 12.9 Transport 7.7 Public authorities 10.3 Percent of G.D.P. at market prices 1964 1953-1964 Gross investment 21.5 21.5 Gross savings 20.5 21.4 Balance of payments current deficit 1.0 0.1 Net factor income payments abroad 2.7 3.8 Government tax revenues 15.7 14.8 Current d,Aficit as j of investment 4.8. 0.5 Increase Decemoer 190o4 IY>')-IYo4 Total money supply R 1.3 billion 4.U p.a. Time and saving'deposits 1.1 billion 13.2% p,.a. Commercial bank credit to private sector 1.5 billion 10.9% p.a. Other lending to private sector (by building societies) 1.9 billion 10.5% p.a. Rate of change in prices 4% 2.1% p.a. Public sector operations Increase 1964/65 1954755--1964/65 Government current receipts R 1,187 million 8.5% p.a. Government current expenditures 1,052 million 8.4% p.a. Surplus 35--million Government capital expenditures 400 million 9.7% p.a. Public investment expenditures (1964) 598 million 6.8% p.a. External assistance to public sector 36 million External public debt (U.S.$) December 1964 1958-64 Average Total debt 330 million 370 Debt service 71 million 55 Debt service ratio 3.5% 3.1% Balance of Payments (U.S.$) 1964 1953-64 Total exports (incl. gold) 2.5 billion +6.% p.ae Total imnorts -2.2 billion +4.71 n.a. Net invisibles -0.4 billion +3.2% p.a. Nt. current halanne -0.1 hillion Commodity concentration of exports: gold 43.5% 40.8% WOOL s 9Joon-yh Average Gross foreign exchange reserves (end of year) $680 million $51O million (or 4 months (or 3 months imports) imports) SUMMARY i. South Africa is economically the most advanced country of Africa. nith only 6a of the population it produces about 257 of Africa-s gross national product and its per capita product is more than five times the average for the rest of the continent. In the world economy, South Africa's importance lies pre-eminently in its position as the producer of 70% of the gold mined outside the U.S.S.R. ii. All sectors of the South African economy have achieved notable advances since World War II, and real output has grown on the average by 5% a year. Over the past ten years gold mining and manufacturing industry have been the principal generators of economic growth. Gold production rose from 11 million ounces in 1953 to 29 million ounces in 1964, worth more than $1 billion. The output of manufacturing industry has risen by almost 10% annually in the past five years, and manufacturing now con- tributes about 30% of net domestic product by comparison with 12V for mining and less than 10% for agriculture. iii. The fast growth of manufacturing has brought increasing numbers of Africans to the towns and provided employment for them - almost 500,000 are now working in manufacturing - at rates of pay which if low by the standards of most whites are much higher than in rural South African and indeed in the rest of the continent. iv. The savings rate has been high enough to finance a rate of gross investment of almost 21% of gross domestic product over the past ten years, supplemented by only marginal amounts of foreign capital. How- ever. boom conditions in 1963 and 1964. fed by a fast expansion of bank credit, gave rise to a sharp increase in private consumption and a cor- responding fall in personal savines. A deficit on the current account of the balance of payments in 1964 was met by drawing down gold and foreign exchange reserves, and the drain on reserves has continued in 1965. The monetary authorities have taken increasingly restrictive measures to re- establish balance of payments equilibrium. but further measures may be necessary. v. The South African Government has accepted as a target an annual rate of growth of the economy of 4 o. over the next five years. Such a growth rate would require a growth of manufacturing of 7% per annum to offAt lower orowth rntAs in minino and nvri miltmrp. Tt wnld alo rpniire the investment of about 21% of gross domestic product and a 5.2% annual yAowth of mrnhandi.q t*ynne.t to nrnvide nAded imnnorts with no net. nqnital inflow, if gold production, as now expected, declines slowly after 1966. A export target may be difficult to achieve, especially in view of the dif- ficultyi of eannn ePo^-%rt maiinfaice becausei of pltcl hne in the rest of Africa. Even if the export target is achieved, however, South Africa yAll n balc otl mpets onang$ m her exitin the next five years to balance contractual repayments on her existing vi. South Africa could afford new foreign borrowings. The ratio of service navments on the external nublic debt to foreign exchange earnings is 5.3% in 1965. New external borrowing is likely to be moderate nnd the hrden of Apht qPrvir-P- liht. South Afria has an xcellent nant debt record. Despite this, South Africa has been able to borrow only limnited amnnts aronad in wzcan+ years exct on short-term hasne of political factors. vii. Doubts about South Africa's political future stem from fears nP 4"+nn-l arharrel -- aP av+awn'l A +n.ah.,+4 n T+a,,nn llr +hnr.ocan+ Government is strongly entrenched. The opposition is divided and poorly on-gn,4MaA A +haw en e 14++tale e.an a n4e o -n-+ 4 +ha -Por- seeable future. Externally, the effectiveness of any future economic -ctL iln againstJ - VJ.UL& fri .Lca. wou"Idt " Vaaj L UI VLUt A f.VCI V'J,As QW IJ.LL -- . V supported by South Africa's major trading partners. In the absence of such ascionorthy frome adtoaluexternal avuouing. as creditworthy for some additional external bnrroving. I. INTRODTCTION 1. South Africa is economically the most advanced country of Africa. With 6% of the population, it produces about 25% of Africa's gross national product and its per capita product at $f90 is more than five times the average for the rest of the continent. South Africa produces almost 907 of Africals steel output and more than two-thirds of its electric power; it accounts for over 60% of rail-freight traffic and almost a half of all motor vehicles. 2. In the world economy, South Africa's importance lies pre-eminently in its position as the producer of 70% of the gold mined outside the U.S.S.R. In 1964 South Africa's gold production was worth just over $1 billion. It is the world's principal producer of gem diamonds and ranks fourth among world producers of wool. In a few years it may become with Rhodesia the world's only source of chromite outside the Eastern Bloc. As an importer, South Africa is the United Kingdom's third most important foreign market, taking 5% of all U.K. exports in 1964. 3. South Africa is semi-arid and sparsely populated. More than half the country has a rainfall of less than 15 inches a year and vast stretches in the west have less than 5 inches. This aridity precludes dense settle- ment over much of the country. With the exception of Cape Town and the surrounding area, the western half of the country has an average density of only about 3 persons per square mile. The great concentrations of popu- lation are in the southern Transvaal centered on the urban complex or Johannesburg, Pretoria and Vereeniging, in the Cape Town area, and in the comparatively well-watered coastal belt running north-eastwards from Port Elizabeth into Zululand. The bulk of the African population lives in this belt where about half the land is reserved for African occupation. Almost half the total population is urbanized; among the whites and the Asians this proportion exceeds 80%; among the coloureds (people of mixed race) it is almost 70%,and among the Africans about one-third. 4. Until the discovery of diamonds and gold in the last quarter of the 19th century, South Africa was primarily an agricultural and pastoral economy. Since then the expansion of gold mining has been the principal generator of economic growth, but from the 1920's and more especially in the period following World War II, manufacturing industry has rapidly expanded. It now contributes about 30% of the net domestic product, while mining contributes 12 3 and agriculture less than 10%. 5. South Africa has developed a relatively sophisticated economy. It produces by far the greater part of its consumer goods and a substantial and growing range of producer goods. A rising proportion (now about 15%) of exports consists of manufactures. It has a highly developed structure of banking and other financial institutions and well organized money and capital markets. Domestic savings are in most years sufficient to finance a rate of investment exceeding 20% of gross domestic product. -7- 6. There are, however, still graat contrasts within the economy. In the so-called "white" areas, the level of development is corparable with that of Europe and North America. In the rural tribal areas, the rapidly growing population, using primitive techniques and little capital, strug- gles to maintain itself in a predominantly subsistence economy which barely provides the staples of life. 7. The present government of South Africa is a minority government in the sense that the franchise is limited to non-Africans.. The Govern- ment's policy is that the Africans should have political rights only in the African areas - the Bantustans - whose elected African governments will eventually have full authority. Some progress has been made along these lines with the settine up of an African government in the Transki but the Bantustans will remain economically dependent on South Africa and the large African population of "white" South Africa will continue to be without political rights. IT. ECONOMTC GROWT9 hrrnll rrnwth nf Chinuii+. .Tlne outpu of the South AfP-rcan zeconormy in ral he'n q asrathrv more than doubled since 1948. The average real rate of growth has been 51 the economy. Exports of goods and services corresponded to 27% of the gross national& prduc in 4~ The exlitto of exor 1. +4-- a rapidly growing internal market which in turn made possible the economic pr o'-- L, J_ _ ± JdLY u1 ul EVZ1. &L-Owlig 01g la LU.1± t7,.D.L VtLJ:DP.LU LAR:: increasing diversification of the economy, however, the ratio of exports to gross national product is not much less than the 30b of the immeduate post-war years. Mining 10. Since 1954 the mining industry has experienced the greatest ex- pansion in its history. The principal factor was the opening of more than twenty new gold mines in the first post-war decade. Gold production which remained fairly stable at 11 to 12 million ounces from ly1o to l9-3 started to climb in the following year and by 1964 had reached a record of 29 million ounces. Although working costs per ton of ore steadily increased, the ex- ploitation of the new richer ore bodies brought a more than commensurate increase in revenues, and profits per ton of ore have roughly tripled since 1953. 11. This history of dramatic growth seems unlikely to continue. Past estimates of gold output have frequently been proved conservative. Neverthe- less, with no major neiw gold discoveries, only four new mines being developed and an expectation of more than twenty older mines closing within the next, ten-years, the industry expects that gold output after a further small increase .iIll start to decline slowly after 1966, dropping by almost 7 by 1974 and by 40 ten years later. This picture would, of course, be changed in the event of an increase in the gold price. - 8 - 12. In other sectors of the mining industry, impressive advances have been achieved since the war. Although South Africa's coal is for the most part of too low a quality and too distant from the coast to make exports economic, the growth of the domestic economy and the great increase in the power requirements of the gold mines brought a rising home demand, and out- Put of coal roughly doubled in volume over the post-war Deriod. A similar increase was recorded in copper production, while with a strong demand abroad reflecting increasing prosperity in North America and Europe. diamond output more than tripled in volume. Even greater increases were recorded in asbestos. manganese and chrome onre (n.f. tnhle 9). Only uranium outnut declined as the strategic needs of Britain and the United States were met; the value of uranium nreAiintie-n fP11 from mor than R 100 millinn in thn late 1950's to R 58 million in 1964. 13. Mine production, apart from gold, should continue to increase. enrna rodnon will more +han dnoble with theopnivngo a new mine a+ Palaborwa in 1966; production is scheduled at 80,000 tons of copper a year. This4 ame Ar hody v.-J. 111 also ro lA y e+ at.e+ ast 8 .to + f iron orennne to be sold under contract to Japan. Exports of other base minerals - mn aeeandtI CbArO-02LU - W.L.L G U UUYV LJ. ..V .LO _L. L * LI 194 more wil.l. 'e pr VoLbcse locally for export, for example as ferro-alloys. The first shipment of pig- - W& S-JL UIL'.zl Ca 9.L. k.1 91U1CLk U Dup yLy mI.L.LLfL tons~ QV Uaci4 IVVC1 UVII YVLD LV C1 towards the end of 1964. The demand for diamonds is expected to continue rise,.L CUIV±d±± O~LIUI 0[k± IUj WIIlCl OVUUEI P±L l- UWUIC inl quantity, and output will increase. With an expectation of greater demands fur uniuum for elecUric power generawion and some prospects of price increases, South Africa is well placed to expand uranium production again, and it is possible that the value of output will have recovered to previous high levels by the early 1970's. Agriculture, Livestock and Fisheries 14. Production of all agricultural crops together has approximately UoubleU in volume since 14114o. Tnough output of the two principal staple food crops - maize and wheat - is greatly affected by the variations of rainfall in the principal producing areas of the Transvaal and Orange Free State (the past two seasons have been years of severe drought) - production of maize at around 5 million bags has approximately doubled since 1947- 198 and wheat output at about 10 million bags has risen by 80%. These increases reflect a substantial rise in acreages planted and, with improved techniques, much higher yields, particularly in the case of maize. Never- theless, with South Africa's relatively poor soils, maize yields at 5-0 bags an acre are still only about a third of those in the United States. In a good year wheat production is sufficient for domestic needs while almost half the maize crop is available for export. In 1962 and 1963 maize exports yielded on average R 80 million. - 9 - 15. Further increases in maize yields are expected as improved techniques are more widely applied, and production is expected to increase at a rate sufficient in normal seasons to provide a growing export surplus. South Africa seems likely, however, to continue to be dependent on imports for about 20% of her wheat requirements. 16. Having access to northern hemisphere markets in the "off" season, South African producers of deciduous and citrus fruit established important export markets in Europe before World War II. Demand rose with growing European prosperity after the war and a market for deciduous fruit was also established in North America. Production expanded accordingly; output of citrus fruit increased by almost 200% and of deciduous fruit by 150% between 19L7/h8 and 1963/6h. While the great bulk of deciduous fruit production is exported as fresh fruit the industry has provided the basis for development of fruit canning. again nrimarily for exnort- and rnorts of canned fruit and fruit products roughly quadrupled between 1947/48 and 1963/64. In total- the value of Pnnrt of frP.h and nrnneed fruit in 196h qmointnd to almost R 100 million, exceeded only by gold and wool exports. Production nontinuA to exPand. Trees alreav nlanted will vinli nn qdei+onal 10 - 15% of fruit each year to 1969/70 and further expansion of deciduous fruit producition t.hereanfterv isQ alroed-rtain. o wekein o ricesQ in overseas markets is expected, and citrds gro'ers are mindful of competi- tion fromr Airontin andi Brazil. qn far, hVinie, thm-el ihiuai34ty of SouthA African citrus has ensured sales at prices very much higher than those of 17, T n omep.,respects, +bnn-n-n-,.-n-e- -lp -..-n -n.e, , -. C.+l f' .S A. PU- W J. jJA Y J6. Q - Wk'J U1 A 6 .L LAU V LJ -'LIL PJJLU-A Africa since the war has been even more remarkable than that of the fruit .L~ J. ~~VLP.L ~ II UI~I .L1JU11V,%A.aVU~ JJ.QU-VW.L La~~ V PJJU. 14J L.. WaVaI~ importer of sugar to the extent of about 10,000 tons a year, by 1964 South .Lric 1au Uecome~ a. ne expoLuzrj wi.LL OLiLIV1=iV I.L11%..LL-11, WJivun L.-Vill Swaziland) approaching 600,000 tons. Domestic consumption had in the mean- Ume risen by about 6v; anu proucion by 1 % o 1.CU mllion toUs. The industry is highly efficient and the domestic sugar price is among the .LPJL' ~ ~ ~ .P.LO U.U UI PJ.U@u ll L VII . R2 VP L LJ_VO U. a 6UG.C.LVUVU PLLU U.L" market in the U.K. and despite the prospect of continuing low sugar prices in toe worlU markt, further expanoun U prouuuvion s in UnU. Japan i0 now South Africa's principal foreign market taking about 250,000 tons in 17V4 anu sale to Japan are expecteU to grow further. DaLUb .n 1rUain and Canada, two other major markets, enjoy a preference over other non- Commorwealth suppliers and South Africa nas a 1965 quota of almost Ju_uUV tons in the U.S. This could be increased, but with projected exportable surplus of more than yu01000 tons in lyuou, ana witn posuible restriclons under a new international sugar agreement, South Africa may well have difficulty in selling its surplus at economic prices over the next few years. 10. In contrast to the great strides made in agriculture, progress in the livestock industry has been unspectacular. The number of cattle has remained stable since the war at about 12.5 million but with mechanization - 10 - of arable farms draught animals have been replaced by dairy and meat herds and by and large production of meat, milk, butter and cheese has expanded to keep pace with the growth of domestic demand. Only in years of severe droughts such as 1963/64 have substantial imports of dairy products been necessary. The other main branch of the livestock industry is sheep produc- tion. South Africa has long been one of the world's major wool producers, but her share of free world exports has dropped in recent years. Production in South Africa has not kept pace with that in the two leading producers - Australia and New Zealand. Wool sales in recent years were about 5OM greater than in 1947/48 but since the mid-1950's production has not risen. This stability has reflected the slow downward trend in wool orices since 1955/56 following the very sharp fall from the Korean War peaks, and in conse- quence some diversion of resources to crons and meat and dairy oroduction in the less arid sheep raising areas. Nevertheless, wool exports have Parned on averna ahout R 119 million in rzcnt yers an nrp qtill thp largest export after gold. No reversal of present production trends is at nrant~ f'oron 19. T1%,efichirim ir%r1iio+Y-%r in South+1 Africa hasc expndedmr v-rapi r.c the war. In particular the growth of fish-meal production has been very fast, and South mad Southqhst Africa together haebechome the ,rw1Ate second exporter of fishmeal after Peru. Stimulated by the results of re- private fishing interests rapidly expanded their operations, especially in th co.ld £113enguel curren.1t a.lonig UL1e west cos of~ Sot UI 111 UI U Q%juvLiv4__0V Africa. In addition to canned fish and fishmeal substantial quantities of rock .LUU v~ u LlV.U .14 L7UC- Uilt: ULULI WU0 (CC,UVVJ UV10, i1IU1_t= ULIcUJl UUUU.Lt: the catch in 1948, and of the total 520,000 tons were used to produce fish meal. Exporvt of fsh anU fish prouuUU knLuinUUg those U roum outuwesU Africa) were valued at more than R 30 million in 1964. Manufacturing 20. The increases in output in mining and agriculture since World War L, have been outstripped by the growth in manulacturiug. net ouuput (at constant factor cost) in private manufacturing industry rose by 6.7% annually between 1>4/140 and LYO1/0o4 as compared with growth rates of L.47 and 6.2% in agriculture and mining,respectively. Moreover the rate of growth of manufacturing has quickened: in the past five years net output has risen by almost l% annually. The following table shows the relative importance of the principal manufacturing industries in 196o2/6. - 11 - Manufacturino TndustriP.. 196P/AA Emplymet lueii Added Textiles, clothing and footwear 19 14 Paper and printing 6 8 Mineral products 8 6 "1V Uad.Ls Metal products 10 9 1-acl.uL c~y 7 L Transport equipment 4 5 lGLAR C~LflCOU5 0 0 Total 100 100 21. The food processing and clothing and footwear industries which became firmly established in the inter-war period have been greatly expanded and diversified in the past 20 years. These industries are generally ef- ficient, prices are competitive and local production meets the greater part of domestic needs. The growth of the clothing industry helped to provide a market for textiles, of which production increased by more than 10 times in the post-war period. Since imports are still large, further expansion and diversification of this industry is expected. Planted forests have provided the raw material for a very rapid development of the pulp and paper industries, and about 8O% of requirements are now met from local production. Further investments are underway and a continued fast growth of output of this industry is expected. The chemical industry is one of the oldest in South Africa having been established to produce explosives for the mines. Later, fertilizers were added and since the war development has accelerated. Fertilizer production has more than doubled since 1958. Further plants are planned and it is expected that with the exception of potash South Africa will meet all domestic needs within the next few years. In the early 19!0)'s the Government financed the construction of an oil-from-coal plant by the South African Coal, Oil and Gas Corporation, (SASOL), which besides pro- ducing petroleum fuels has also provided a new source of raw materials for the chemical industry. Materials for the manufacture of plastics, solvents and waxes as well as fertilizers have been produced, and a recent notable development was the establishment of a synthetic rubber plant which commenced operations in 1964 using raw material supplied by SASOL. A continued fast growth of output of rubber products, related in part to the growth of motor vehicle production is expected. SASOL produces only about 5% of South Africats petroleum needs. In recent years large investments in new refineries to process imported crude oil have been made and further major investments are planned. 22. The metal and enzineering industries have also made notable advances since the war. South Africa's first integrated iron and steel works was es- tablished by the South African Iron and Steel Corporation (ISCOR) set up by the Government in the late 1920's and it has retained since then its dominant role in the industry. Steel production has risen from less than 500.000 tons to 3.2 million tons over the post-war period and the industry now produces mor than 0O/ of Smith Africa's steel needs. Costs are low and nrices highly competitive. The availability of low-cost steel assisted the growth of the Pnminp.rina indnmtrv 1nna Astablished and located mainlv on the - 12 - Rand to serve the needs of the mines. Since the war progess has been rapid with the value of output in engineering rising by 20u a year to 1961/62. Volume indices show as fast a growth in the past three years, and expansion is expected to. continue, though perhaps at a rather slower rate than in the recent past. The transport equipment industry, particularly motor vehicles, has also made notable advances. The motor industry was established on the basis of assembling imported parts but in recent years has diversified into the manufacture of components, and the local content of the more popular models has now risen to about 50%. New car sales in 1964 exceeded 130,000, and increase of 300 over 1963. Further rapid growth is expected, though it will not be possible to maintain the rate of expansion achieved in 1964. 23. As indicated above, the Government has played an active role in promoting industrial development. Besides establishing major industrial ventures such as ISCOR and SASOL it has assisted industry by means of tariff protection and the use of import controls. The extent of protection has been moderate. It has usually been of the order of 20-25% against Europe and North America but in recent years relatively high rates have been applied to protect certain industries, notably textiles, where competition from the Far East was severe. Import control has been applied primarily for balance of payments reasons, though it has inevitably had protective results and in certain cases it has been used deliberately by Government to stimulate industrial development, notably in the motor industry to promote the manufacture of components. With the great improvement in the balance of payments position after 1961, import controls have been progressively relaxed and the Goverment's basic policy is to provide protection by means of tariffs rather than quantitive restrictions on imports. 2h. The Government has nrovided further assistance to industry through the Industrial Development Corporation set up in 1940. From its inception to mid-196h the Cornoration accented inst over 530 applications for assist- ance involving R 285 million, but the Corporation has played as important a role as an initiator of new nroicts. sometimes narrving out the basic studies to determine the feasibility of a proposal and then interesting pnrivatep capnital either at hnma ni n-nr in~1i hn the new ve.ntmre_ By far the greater part of financing for industry has come from private sources, and althonLh many South African industrial firms are subsidiaries of or associated with overseas companies, the participation of these compa- nies has hpn nnnfined mainly to the nrnvisi on of tehnieal know-how and management. Little new money has been invested in South Africa in recent yeArs, And sucnh capnital As, thenn f-irms 'have- promAded hans t-nnqsi.qtrd Mninly of reinvested profits. An important source of finance for industrial ex- nnsion hqs hppn the lra minino finanne homes which have divprqi fi edt into manufacturing, particularly since the 1950's after the newer gold mines cme into full nrodution With fr naw mrnn hpinn opennd un and enntinud controls on capital exports, the finance houses are expected to continue to Savings and investMent 25. Over the period 1948-1964 gross investment was in excess of 20% of the GDP in all but three years, the average being 22%. In the late 1960's and early 1950's. aross investment averazed 26% of GDP reflecting in part heavy expenditures on the development of the new Free State gold mines. In more recent years the rate of investment has tended to decline. though the rate of growth of output has risen. This partly reflects the rapid increase in gold production from the mid-1950's after the heavy investments in opening up the new gold mines had been largely completed. It also re- flects highly productive investments in manufacturing industry, and the relatively small share of total investment absorbed by housing and social investments, the standards of which for the great majority of the population are still relatively low. 26. Domestic savings averaged almost 20% of GDP over the period as a whole, but contrary to the trend of investment the savings rate has tended to rise averaging 22% of GDP on the past five years. While in the late 1940's and the first half of the 1950's an inflow of foreign capital es- pecially to the mining industry helped to finance the unusually high rates of investment of those years, on average contributing about 26% of the funds invested,in only one year since 1956 has a substantial part of investment been financed by net capital inflow. 27. As the economy has become more diversified since the war, so the investment pattern has changed. The share of public investment has risen moderately over the period, but the shares of agriculture and mining have fallen, while that of manufacturing has risen sharply, especially in the boom year of 1964. Comosition of Gross Domestic Investment (Percentages) Averxqy Av rape Year 1948-1954 1958-1964 1964 Agriculture, etc. l4 9 '7 Mi5ni 10 Manufacturing 13 18 26 Commerce, etc. 9 12 11 Housing 13 9 9 Government corporations 8 8 8 Other government 19 23 21 rr04 -- - --%ZI, ^ n ( I.LL .L 6JVV11MIPL1i , _ _ 4Z Total 100 100 100 28. Public investment has accounted for about 40% of total investment in recent years. Identifiable public savings fell considerably short of this, and probably about a fifth of total public investment has been financed by borrowing from the private sector. The progress South Africa has made in financing investment from domestic resources is shown in the following table. - l4 - The Financing of Investment (Percentages) Average Average Year 1948-195 1958-1964 1964 Personal saving )-- 30 18 Corporate saving./ -J-3 18 21 Current surplus of Public Authorities 11 16 17 Depreciation allowances: Public sentor 8 11 11 Private sector 21 32 28 ryross,. 1nont.ir- qnvinag n Net capital inflow 26 -7 5 Totl fiinrz nrilnhl 100 I0N 100 90. While nrivate consumntion exvendi+rPe rew more slowly than national product over the past decade a number of non-economic factors contributedr t^3o he ris inpsol saviings in recnt+ yars c (c.-r. chnnate III), factors which were clearly not present in 1964 when personal savings fell sArplyt (byr AI [ T6)noDespitethis fanl'l, urn oetcsvns r sufficient to finance 95% of gross investment, the balance being met by *- doM- foreignA exca,n reser ev. )J lldV.L11 Ion o gct.LU, UV- ULIU tL UItLkjUd. %LJ4 1.LLUU.iLi 1 Luk ifL South Africa (after tax), a high rate of personal savings is likely to continue, noUwthstanUg expectUeu increases in te incom e O non-whiteS whose marginal propensity to consume is high. The burden of taxation is gliu anU Utere L clearly scope for L1ceaUu1g governmenu tav.ngs, wAcU in recent years were less than 5% of gross domestic product. Depreciation allowances have grown as a proportion of gross domestic product to about o.5,b in recent years, and this trend is likely to continue with the growing share of output contributed by manufacturing industry. It seems reasonable to expect, therefore, that the savings rate will be maintained at approximately w jtv".d of tMu pNar8 azm wat Smn kfrca wll De able to inance 11 - tut margihal amounts of imv6stment from doestic savings. Public Finances 31. In South Africa the public sector includes not only the central, provincial and local governments, but also the state undertakings such as the railways, harbours and airways and the state corporations like ISCOR, SASUL and ESCUM (Electricity Supply Commission). The central government has traditionally budgeted for a small surplus on current account and has met the bulk of capital expenditures by borrowing, principally in the local market. This has been the broad pattern of central government finances since World War II, though in the late 1950's and early 1960's large current 1/ Includes Government corporations. - 15 - account surpluses were realized. The growth of government expenditures ~ .~~J4 ,t~Y "\ j U. VJ1 4 ULI VLI~1 j l,J Vill UL '4 ULIA, ' Q1L.&L CL n.1LJ_LU. VUt4. 4. L 1 expenditures of public authorities - the central, provincial and local governments L0.~ UUJLUUUr 4UUUU L.L-.LCP V-L UJ1_ .Lil u UZI-jJ~.LUU S>.L1L;t,- 1943, while capital expenditures of public authorities have accounted for U6 of GDr and capital expenditures o1 public corporatons for less than /%. This pattern has changed slightly in the past three years, when partly as a result 01 arply rising detense expenLtures and partly of tne Uovern- ment's efforts to stimulate economic recovery by increasing public spending, total expenditures of public authorities nave risen by about 12> annually and their share in GDP has risen from 17.4% to 18.4%. 32. The proportion of GDP absorbed by current expenditures of public authorities in South Africa is about the same as in the more developed countries. The South African position is very different, however, in re- lation to the tax burden and income redistribution. In South Africa there is not the massive income redistribution through the budget which charac- terises the more developed countries, and as a result the weight of taxation is much lighter. Tax revenues as a proportion of GDP were only 15.,7% in 1964, less than half the proportion applying in many developed countries and although direct taxation of South African companies, particularly the gold mining companies was quite high, in the latter case being about 407o of profits, the direct taxation of individuals as a proportion of total personal income amounted in 1964 to less than 5%. Indirect taxation yielded about 38% of current revenues in 1964. 33. With the low level of taxation on individuals, the marked ine- quality of income contributes to a rather high rate of personal saving. Though personal savings have fluctuated markedly from year to year, they have on average amounted to 8.5% of personal incomes over the past decade. A substantial part of these savings have been channeled through institu- tions such as pension funds, life insurance and building societies and through the banks to the capital market and in general the government has been able to meet its loan requirements from the market. Monetary Developments 34. With the importance of gold in the South African economy, the authorities have traditionally been sensitive to factors likely to increase gold mining costs. Economic growth has been encouraged but price stability has also been a major objective and monetary policies have been conservative. 35. The supply of monev - demand denosits plus notes and coin in circulation - rose by only 1% a year from 1948 to 1961, far more slowly than the real Prowth of output. However. "near monev" in the form of savinas and fixed deposits grew very rapidly as the banks in response to competition from thp huilding qnipties and hire-nurnhq: finann hune wpri fnrntd to pay higher rates of interest on these deposits and the ratio of "near mney"r1 ton monney- in circulatn+ion -rno from 113% in 198R fn~ A)4 in 1961- Furthermore, partly as a result of the development of new financial insti- thetion a an incrasinglyrpopistithed oney marets,ite W d c ae -- - the Nahtional Finance Corporation, the discount houses, the acceptance houses, a-nd th ociln banLKS haVe aLl been etablished Since 190490 - the - 16 - velocity of circulation of money sharply increased, so that although the s-ipply nf mneypi o-n the marro-wer de~f'inition in-eaq- qn q1)w1v the crediit, needs of the economy were met. Prices rose moderately - wholesale prices 13% annually, reflecting in part the great increase in foreign exchange + '" - -- - -s;a. o.4a .a, a A T v r 4 -1- -- -4 --- -. -.fC - a,I -, yr ,i' , 4 1 44,a W~~.V~C~ V--L ULK Lxui L * .& ll V 0 )P J4 .%V J V ,L J .NWL LLVJAi.J .iCJ second half of 1964, when with increasing pressure of demand on resources Ulu~ ICLUC, !JL CLUVa11lQU qULL.~U1%1t,L U IL ~1 ULM: WLV_tZ;CL.t- CIU I.J~UCL.L_LJ. L;e ±LWA.L LU both rose by about 4% over the year. 37. At the time of the Banking Act of 1942 the growth of the new deposit instiuLions was not foreseen. Uver the years tne commercial banks founu themselves increasingly at a disadvantage particularly in regard to reserve requirements and liquidity ratios vis-a-vis the new institutions, andU te latter were not subject to the same degree of control by the monetary au- thorities. To remedy this, new banking legislation was passed in Ouly IYo4 requiring that the provisions relating to minimum reserve balances, liquidity ratios and prescribed investments should be applied functionally to all banking institutions, except the discount houses, and giving the Reserve Bank powers to vary liquidity ratios and to impose supplementary reserve requirements on all classes of banking institutions. This change will' strengthen the monetary authorities' control of credit, the need for which has become clearer in the past two years. Foreign Trade 38. Reflecting the large increases in output of the economy and its marked orientation to the export market, South Africa's exports have increased almost without interruption over the post-war period. The value of commodity exports fell after 1957 with declining prices and did riot surpass the 1957 level until 1961, but this decline was more than offset by rising gold exports Taking commodity exports and gold together, the value of exports since 1948 increased by 8.5% annually, while the value of commodity exports alone in-- creased on the average by 8.6% annually. The volume of commodity exports has approximately tripled since the war. 39. In its commodity trade South Africa benefited from the great rise in wool prices in 1951 but since that time largely as a result of declining wool prices the export price index has declined by 25%. Gold exports bene- fited from the rise in the sterling price of gold in 1949 but even after taking this into account the terms of trade have moved against South Africa over the post-war period. 4o. The steady and continuous rise in exports was not matched by a corresponding growth of imports. Imports rose sharply in the first five years after the war reflecting rising prices and the heavy inflow of capital. Since that time the trend of import prices has been stable while the volume of imports, although with year to year fluctuations, rose very slowly until - 17 - 1963 and 1964. The result was a growing surplus on the balance of trade 1952 to R 540 million in 1962. However since that time imports have risen r i 1T !v14j, ~ , ,,+ I.rw.1 4- 4. -4- __ _ 4s nP - - -- - - - A4), 001" . kL%..4 JLAAILL. .A.%.J C AV'AU L L4JQ %d..L VL.uJ L. UJLFJ'.J U~J V.L LILUI I_LIMdII'.LL exports, about half consist of agricultural and pastoral products, of which wOO.L9 h.Ldes adU skis mize,i~ fru iup 0UVCtI_ ctLIU L .LOLI JJIOUUUUU0~ Ul-:: LIut- MOStu L important. About 8% of exports consists of non-metallic minerals and mineral P1 uchieff- l.~!y dUlndSUU ad caSbStUS - CUIU ±L4/o U.[ L±L U LIUU'L and J mtl manu-. factures including machinery and vehicles. The nine leading exports - gold, woOL, AUmonUs, uranium, maiZe, fruIt, sugar, copper anU asbesos - together comprise about three quarters of total exports. 42. South Africa is almost self sufficient in food and imports are small consisting mainly of hard wheat, coffee and tea. Capital equipment represents about a third of all imports. The bulk of the remainder con-- sists of materials for further processing in South Africa. With the develop- ment of manufacturing industry over the post-war period, and particularly in more recent years imports of articles ready for final sale have declined both absolutely and as a proportion of total imports. From about 25% in l9-7 these imports dropped to little more than 10% in 1963. Over the same period, imports as a percentage of gross domestic product declined from 23.5% to 18.9%, and although interrupted in 1964, this trend is likely to continue. The Balance of Payments 43. The period of substantial capital inflows from the end of World War II to 1955 was marked by a succession of adverse balances on current account. From a peak of R 360 million in 1947, equivalent to almost 60% of imports in that year, the adverse current balance steadily declined to just over R 100 million in 1955, equivalent to only 10o of 1955 imports. Since then there was a net capital inflow in only one year,1958,and from 1959 a succession of current account surpluses until 1964. 44. As the investments financed by foreign capital inflows during the first post-war decade came to fruition, investment income payments abroad rose substantially, from R 55 million in 1947 to more than R 200 million yearly in the early 1960's,equal to 12 % of export earnings in those years. This increase reflected in part the high earnings on direct investments of foreign firms in South African subsidiaries and branches. With the growth of foreign trade, payments abroad for freight and insurance rose rapidly until the early 1950's but the slow growth of imports since then, the long- term stable tendency of freight rates and the development of South Africa's own merchant marine combined to limit further growth; in 1963 when imports rose sharDly freight and insurance payments amounted to R 100 million. only R 10 million more than in 1951. South Africa normally has a small net deficit amounting to about R 10-1q million annually from travel and tourism. - 18 - 45. Except in 1958, there has been in every year since 1957 a net private capital outflow, averaging about R 60 million annually. Just over R 50 million of this represented the sale to South Africans by foreigners of South African securities. Since 1957, there has been a small continuing investment by foreign firms in South African branches and subsidiaries but this was more than matched by investments of South African firms in branches and subsidiaries abroad. Over the same period, there was a small net inflow averaging less than R 5 million a year of official and banking capital, but very much larger additions to gold and foreign exchange reserves, wbiihf averaged R 27 million annually. Thus the impetus to the further growth of the economy which might have been expected from the growing surpluses on the balance of trade over the decade to 1962, was largely offset by the effects of steeply risina investment income payments and capital exports, the latter becoming more accentuated with the political crisis of 1960, - until checked by the imoosition of restrictions on the export of caital by non-residents in June 1961. Economic Growth and the African 46. Despite the application of the government's policy of "apartheid" .inrs 1Qi8_ the naith nf the economy over thp nnnt-war nPrind has heAn qr- companied by a steady increase in the numbers of Africans in "white" areas of Snn+.h Afrian. The +o+.n Afrianr noulio+.n has crnn fvnm eight to twelve millions and while the number in African areas has increased from almost 4 tor aboiut C milli rnq fnwn 'hniri -"Jnr cz;nn~+" ~ +n shn+ milion thos -an hnre-nS an- n 11rhitel famhve on from just over 4 to 7 millions. The fastest growrth has been in the urban African k nm,opul, aiio _1m 4c Ini- roughl d-b.., , A, ed1on and nowt numers al -t 1 n.c - -4 n -A 1 4on The censuses of 1946 and 1960 show an increase in the economically active Afia poplaio ofv ^- 1 milio to4 3.9 1 m4IlIon.^ The. "rmbr I,n- m o industries increased as follows: 1946 1960 % increase t.rL L'.4.U4.-, 4'.± mJ.LJ, ...yLJ a .0J .. ~. Mining and quarrying hh1 539 22 Manufauring 163"9 Construction 76 165 117 Uommire du iand'LIIc-U1Ce 71 1_5U 122 C Other services 748 910 22 47. Figures of employment trends since 1960, although incomplete, show a slight decline in the numbers 01 oAricans in m1inng, but a ubustanUal increase, exceeding 100,000 in manufacturing. This has been the sphere in wnich opportunities for Africans have opened up most quickly and where wages have been highest. In 1963, the average annual wage of Africans in manu- factiring was R 42. This compares with an average cash wage in mining of - 19 - R 152 per annum, but in addition the mines provide free food, accommodation and medical services. Data on wages on white farms are limited, but the comparable average would probably be well below R 100 though here again wages in kind are also paid. 48. It has been government policy to restrict the entry of Africans to the towns to such numbers as can find work and housing there. This has to some degree limited the zrowth of a readily accessible urban labour pool on which employers could draw, but in practice the policy appears to have been anolied in a way which has not seriously hampered industrial arowth. h9. In the Government's view. Afrinans in the towns are essentiallv migrant workers who have no rights to own land there and who are expected to return neriodic1v tr their "homes1 in African arns. Mny urhn Africans do retain their interests in the reserves and periodically return there, for Pamnp +n n1nnt the crnn. The onqmAntn1 Innk of continuity in urban employment combined with very limited opportunities for formal training ndir thei oppsti+4n o%f establisjhed1 ihite= trae uinsn has hamnpered the African's acquisition of skills and his rate of advance. Nevertheless, manym Afri c ainsz are permanent tOUnSmen, manyr ha-r nijve nt j ricA- ol c+-i 1 I z15 in some cases advancing up to the levels of the whites, and Africans have been employed i n" anvr evridenin rang of 4 - skile and.se,isVinre occupations. 50. It is also official policy that the urban African as a migratory wu t-.L J-0 uICLULuJLIpauseU o V uw U VI y wL e u.L a A macL11"_y . ILI M.L1 It;u11 LJ1.uIiU workers are such. In practice, however, the female urban African popula... .In. asmard-L~uy i n Cr - d . E U.L t:cL1z±: ofL aL popJu-lato U.U1 U UUj VVUL1 the African townships to the south-west of Johannesburg, 450,000 were liv- Ing in faml_y accommoUaUtonU in -LU. Progress in proviUIng urban Housi.Ig for Africans has helped to make this possible; from 1948 to 1964, the Government, mainly working tnrougn the local authorities, provided R 131 million for African housing in urban areas and built almost a quarter of a million homes. Africans were trained and used to build these homes. L. wniTe arTisans nave traditionally been protected against the competition of the non-whites by the application of "the rate for the job". In 19o the Government introduced legislation under wnich particular jobs or occupations may be reserved for whites or in exceptional cases for other racial groups. The implications of this legislation for African advance- ment are extremely restrictive, but in practice under the conditions of boom and labour shortage of recent years it has not been widely applied. It is estimated that only 2% of the non-African labour force has so far been affected, and frequent exemptions from job reservation determinations have been given. 52. Notwithstanding the growth of the urban African population, large numbers are still in the reserves where despite considerable progress in combating soil erosion, in building roads, and in promoting better animal densities are quite high. /In the Transkei and Ciskei densities of 84 and LIJ4.j.,~ ±~ U.LVV.recr~UOU U .11 JL7V%J-J Jt.L[1UUL1 LI1,U~ V.L~ the African tribal lands are in the better watered parts of the country, v U %A vAUoo ause 1enU IL Vca. r4quJiremUno anu .L Ld clear tnat even the existing population cannot make an adequate living in agriculture. Increasing numers must, UHerefore, find other employment. To help meet this need and to prevent a still more rapid migration of Africans to the existing urban areas, the overnment adopted a policy in 1960 or providing incentives to manufacturers to establish new plants in so called "border areas" adjacent to native reserves. Under this policy the African workers are to work in the border areas but live in the reserves where townships are being built. wages will be lower in border industries than in the major centers to take account of differences in productivity and in living costs, but about the only barrier to the African's advancement will be his ability and level of skill. The areas so far selected as "border areas" have in each case particular advantages, such as location, natural resources or labour availability which offer good prospects for development. To speed this development the Government decided in 1964 to give much greater attention than formerly to the establishment of vocational and technical schools to train Africans for border area industries. 53. Though the border area policy was originally conceived as a means of providing employment for Africans as well as a step towards decentraliza- tion, it has recently been widened in scope. The same sorts of incentives have been offered for the establishment of industries in areas where there has been continuing unemployment among whites and coloureds. Sh. The border area policy began to be applied in 1961. Since then progress has been slow but the pace of advance has quickened. New factories or factory extensions established in border areas with government assistance up to April 1964 had given employment to about 13.000 Africans. Some plants had also been set up in border areas without Government assistance: these were estimated to have given employment to a further 3.000 neonlp. almost all Africans. These figures compare with the increase in total African employment in manufacturing given in paragraph 7 above. and are relatively small. Nevertheless the border area policy could be a useful means of open- ing up wider opportunities to Africans in industry. and the Government is placing considerable emphasis on decentralization and border area development. 55. In summary, it is clear that in spite of the barriers to African urbanization and advancement. the growth of the economy and narticularly of manufacturing has brought increasing numbers of Africans to the towns and. has provided employment opportunities for them at relatively high rates of pay, so that an urban African population has emerged, enjoying living standards which if low by the standards of the whites are minh higher than those in rural areas of South Africa and indeed of the rest of the continent. While the fastest arowth in manufatmrino emnloyment i. lilrely +n tnnin io be in the older established industrial centers, the development of border areas could nsPfully sulnnement this. Exnayrienc A thota +pe+iod and especially during the past three years has shown that the resistance to insuhlss liey tf o cfui-mr 2 +v"r 4n44 - 4i, an en of r d e m gw. is much less likely to occur in an environment of rapid economic growth. - 21 - III. RECENT ECONOMIC DEVELOPMENTS 56. While the growth of the economy over the post-war period has been continuous it has not hen Aven. The lnst five vars have inliuded a recession followed by the most sustained*and rapid upswing since the war. 57. The recession followed the incident at Sharpville in the spring foreign investors and was aggravated in the summer of 1961 by South Africa's ,Withraw-al from the Co.ML-,Walth-~ .1 rpu-, ,,n- jmmedi,,aA e effec a aCa a .4+,- drawal of capital from South Africa by non-residents. In 1960, R 152 tinued in 1961 until the South African authorities, in order to protect VL40L4. 0J0 0Ji0 .1. J. ~A.±1d.4~~I ~0J V~ V L ,L0± L%0'A LCX.L.LVIL .1.1 Will IL .)CL4 million at December 1959 to R 173 million by the end of Hay 1961, im- year. The immediate drain on the reserves was stopped and the reserves recovered by R 110 million-1 Over the reandrofteUer 'X. ime snock to confiuence was fellu also oy residents 0 Sout 1 airca. With no fears of inflation, but a greater desire for personal liquidity, personal savings rose sharply in 1961, and domestic investment declined marginally. Output grew in 1961 by only 2% due mainly to the rise in exports. 59. In 1962, the Government sharply increased its current expenditures, largely on defence. Domestic investment increased fractionally, exports again rose substantially and this together with the sizeable increases in public and private consumption resulted in a growth or real product or 7.37. Partly as a result of the tightening of import controls, imports increased marginally, being still well below the 1960 level, and although the authorities permitted some private capital outflow, amounting in 1962 to R 75 million., gold and foreign exchange reserves increased over the year by R 200 million (70%) to reach R 488 million, equal to more than five months imports. 60. The increase in savings, reflected in the rise in foreign exchange reserves, brought a great increase in the liquidity of the economy; over the eighteen months ending in December 1962, the total of money and near- money held by the public with the banking system increased by 25%. The Reserve Bank's discount rate was reduced from 1 $ to 4% in June 1962 and by a further 3a in the following November. Other interest rates followed Bank rate. With the stimulus provided by rising consumption expenditures and the ready availability of finance, private investment at last recovered, rising by 21% in 1963. The implementation of new projects in the public sector, notably in iron and steel, chemicals and the railways raised public invest- ment also, by almost 24%. As the recovery gathered momentum, personal consumption rose and the fast growth of government consumption expendi- tures continued. The increases in all major components of demand aradually took up the slack in the economy but did not encounter serious bottlenecks. Supplies of skilled labor were auemented by rising immigration in 1963: net immigration totaled about 31,000 compared with - 22 - less than 12,000 in 1962 and only 1,300 in 1961 and there was still a margin of unused capacity in the construction industry. Output rose by 7 in real terms over 1962 and with domestic production augmented by a 23% growth of imports, reflecting in part an easing of restrictions on imports of consumers goods, the increase in prices was moderate, only 1.2% in the year. 61. Despite the sharp rise in imports in 1963, and a higher rate of capital outflow than in 1962, the increase in commodity exports and gold output was such that exchange reserves again rose - by R 80 million over the year. Thus, notwithstanding a 17% rise in discounts, loans and advances of the commercial banks in 1963, the bank's liquidity ratio (ratio of liquid assets to liabilities to the public) at the end of the year stood at 44.4%, less than 5o below the level of December 1962 and well above the 30% minimum required by law. The banks were in a position to expand credit substantially, and with intensified competition from other lending institutions they were under pressure to meet the rapidly rising demands for finance. In 1964, discounts, loans and advances of the com- mercial banks increased by 40h. Personal loans and hire-purchase credit rose sharply and the banks expanded lending to finance the purchase of plant and equipment. Private investment rose by 26.5%, the greatest increases beina in manufacturing (h6%) and residential construction (36%). and personal consumption expenditures rose sharply. With investment pro- grams alreadv underway. the Government and the oublic cornorations could not cut their investment spending substantially, but in the event public investment rose by less than 85 in the vear. On the other hand, con- sumption expenditures of public authorities continued to advance, and the current surnlus of the central aovernment was sharnly reduced. 62. The pressuire of demandi n rsn in 190) wasq such asq to c-rea,qte acute shortages of some types of skilled labour, notwithstanding a further ri-i in immicratinn t hO,.e% and retered unemployment fell to less than 1% of the labour force (about 2.5 million) covered by the statistics. In.- reasing use wAs made of non- whitp-. Inhnrr in morp zkilled onntions with a consequential "up-grading" of jobs done by whites. The capacity of the construction inusrywa fully" uii+limed, andl szho-rge ofmaeil as well as labour emerged. Despite these shortages output rose again by '7_4 - ,a.l +-.no 1hi+ thi was - n -- 9 4a+ +no- -h 1- "1 in rlo mand which spilled over into the demand for imports. Imports rose again the current account of the balance of payments turned from surplus into deficit in the fi-rst quatro 041O. W.4 4-11 a -44--edat ^Pi,,~ vate capital, gold and foreign exchange reserves were reduced over the year I_y -D . 1,1 1 ±L-L..L t. 'L%. L4V) I.; LLLUL I4.~ .1.11C Utid.L± 14 LILUAIULIO imports at the 1964 level. 63. The monetary authorities did not feel that action to curtail the expansion was required during the early part of Lyo0, though the strong upward trend in private investment became apparent towards the end of 1963. - 23 - The authorities thought that the fast growth in the commercial banks dis- counts. loans and advances over the year ending in June, 196h, coupled with the deficit on the balance of payments would so reduce the bank's liquiditv ratios that they would be forced to curtail lending. The com- mercial bank's liquidity ratio was in fact reduced to 38.4% by June, 19614, but with heavy payments by the Government to the orivate sector and some inflow of private short-term capital in the second half of the year, the banks were able to exnand credit even more ranidlv in thp secon than in the first half of 1964 while liquidity ratios were reduced only marginally to 37.3% A), iT4.- +.hem chbnag i-n supply -i - demandl -reAInnnhipns i n the1 mnoeyj and capital markets consequent upon the economic upswing, interest rates lir hai begn orisea tords t"iche endA of- 1963, ndA BnnL raten wancresdt Ktd in July 1964. This was not intended by the Reserve Bank as a positive 1+1 ~ ~ ~ me sur 'k1,+ ~ c,v~ ,+ -t e a, s --r+- -4 i - -- +4 ~- of~ +I,-, in market conditions. A further Vg rise in Bank rate in December did not ,,a±~, ~ .La ..~ 'JL. ~ ~J. J. JCL XUfl . L ,J. "I " &'J4~ .I .A Z L ' .L '.L L Ail first two months of 1965, and the authorities felt that firmer action was needed. Mn av wdo a. L n naron L, ug rate )aa Av vu- 4 mina vLuom 4 n4 ratios of liquid assets to be held by the commercial banks against their ort anu meu u "11 verm LU.. I% O.uUO ou vU11t jUL)..LU wcrl-t; _uIL CoUU UY 4/3 LIU 34% and 24% respectively, and the Reserve Bank announced that it might UP-uline acoxxanouation or cnarge penalby rates uo wiy insultuuon waLLCu In its view had been extending credit to an excessive extent or for non- essential purposes. As gold and foreign exchange reserves continued to decline in 1965 (to R 358 million at the end of May) the banks were re- quired to raise their ratios of Liquid assets to short and medum-term liabilities to o%O and 30% in June, and there was a move by the Reserve Bank to increase long-term interest rates. It is still too early to see the impact of these measures on the economy generally and the balance of payments in particular, but if the steps so far taken do not prove adequate to meet the drain on exchange reserves, import controls could be tightened. The Government has been reluctant so far to take such action in view of its unfavorable impact on prices and costs. - 24 - IV. PUBLIC INVESTMENT AND ITS FINANCING ILle Ue~ntra.L UvVelmTenT, o. The changes in the economic climate of the past five years have had a major impact on the financing of government investment. At the time of the recession of 1960-61, the government cut taxes on individuals and, as mentioned above, sharply increased current expenditures. The increase was partly for defense,but spending on new investments in the railways, water development, housing and the development of native reserves also grew rapidly. (c.f. Table 17). Defense spending has risen by roughly five times over the past five years and now accounts for 14.5% of total central government expenditures, while in the same period direct expendi- tures of the central government on African administration and development and expenditures through the S.A. Native Trust have risen from R 23 mil- lion to almost R 100 million. To the latter must be added expenditures on services for Africans of the Departments of Health, Community Development (housing) and African Education which total R 47 million in 1965/66, so that spending on services for the direct benefit of the African population has roughly quadrupled over the past five years and in fiscal 1965/66 amounts to almost 10% of projected central government expenditures. 66. With the increase in current expenditures in recent years, the government's current surDlus was sharply reduced from more than a 100 million in 1959/60 to R i5 million in 1962/63. To maintain capital spendine in these circumstances. the government was forced to step up its borrowings in the market, and with the great increase in personal savings, it was able to do so without difficulty. borrowing a net R 200 million on long term in 1962/63 and, almost the same amount in the following year. These In-term borrowings enabled the government to accumulate substan- tial cash baLances and also reduce by about a quarter its internal short.- trm ht At. t,hA namp tim it met schpduled renayments on its external debt which over the three years ending in March 1964 fell by R 77 million 67- As thA Pnonomi rprovery gathered momentum imposing new demands on services provided directly by the state, such as the railways and posts and telegraphs, anA AR nvP+mAnt prnionts which wpre planned as numn- primers in the recession years reached the stage of implementation, invest- mnt expnitures of-P +he ent+wn anril leal cnvrmnts inorPASAd sharplv. In the fiscal year 1964/65, investment expenditures of the central govern- mn+ alenn a+ T4 la m-Illien wern more than a third arpat.pr than in 1963/6h. (the major increases were an account of the railways, housing, water de- w an amA +hn A walamment n an+4w~ va rvev Tha &nvernmPnt aain V _J.WyjJ*U . W -.A- y 4~~.±M 'yC- - a- s . ,*0 - sharply increased its borrowings and this at a time when the demand for __4-4._M.~ s- +- -n v%t"ATr_?%z "AW0 i_C_en115 nf fhp-*V * private sector in 1964 at R 211 million were double the level of 1963-- anU WWLL %;4_AL 1I,OI. CVoULU A UJL 1 V&A -- --'r'- - -- plus into deficit. The consequent tightening of the capital market brought crpri si , a late Ln11 ise OfUWQ the ce. tr UAagv.e.LV corporations, and later on issues of the central government. - 25 - 68. Interest rates would probably have risen further had a rather fortu tous circumstance not enabled the government in l9o-65 to raise the whole of its local borrowings by issues to the Public Debt Commis- sioners, and had it not been able to raise new short-term money abroad. The normal resources of the Public Debt Commissioners, consisting prin- cipally of pension and other trust funds, were supplemented in recent years by the temporary deposit of funds to be subsequently spent on ex- ceptionally costly items of defense equipment. The accumulation of these funds together with other resources enabled the P.D.C. to subscribe for unusually large amounts of government stock in 1964-65, as shown in the following table. Net Borrowing of the Central Government (R millions) From From Public From Domestic Year Abroad Debt Commissioners Market Total. 1961/62 -26.8 93.0 40.4 106.6 1962/63 -19.5 73.0 96.3 150.8 1963/64 -31.6 150.0 55.2 173.6 1964/65 +38,3 233.0 -1.6 269.7 1965/66 (Est.) -0.6 135.0 70.0 204.4 69. Net borrowings of the central government in 1965/66 are expected to be substantially lower than in 1964/65 and this in spite of an 11% increase to R h7 million in expenditures on loan account (the major in- creases are on account of housing. water development and the development of native reserves), and in spite of the carryover of a deficit of R 19 million on loan account Incurred in 1g6h-q This is bcause of higher loan recoveries and because the surplus of R 110 million on revenue ac- count accumulated in the nast three years will be transferred to loan account in 1965/66 together with a R 30 million contribution from cur- rent revenues (nartlv covered hv a 4 surcharan on income taxes naid by ccmpanies*) and the proceeds of a savings levy to be imposed at the rate of 5%9 on inrno t.Axesq pAid byv fnmpnrAis* andi the Y-inhe.qt thirdl o%f iriAi- vidual taxpayers. 70. Although net borrowings will be smaller in 1965/66 than in the -rirppein - uay +.-r.Tn fne+.i-.q nv-o -4Hlal-tr +e% rrinea +lhm ~ vnizn rif I+hi. -naim far from easy. Large drawings from the special defense equipment account w11 reduca h an+ by abu m4114n" +$,a oan,n1ea availa +o +h= ThMlir Debt Commissioners for subscribing to new government issues. Secondly, * Excluding gold mining companies. - 26 - although the R 70 million to be raised from Drivate lenders is well below the amount raised in 1962/63, the state of the market has changed radically since then. Whereas in the earlier year the sunnlv of canital exceeded the demand, in 1965/66 the Government will be attempting to borrow at a time when personal savings have sharnly denlined, when liquidity is hein, reduced by the continuing loss of exchange resources, and when the demand for capi- t.l from the nrivate qector is high- nrnhably as high as in the neak vpar l9()- 71 Thenobe of raiszing the -required amouint. of loan fundis in 1o(-66A would be still more difficult should planned foreign borrowings of R 30 Tn4l114r%,n +_^ I~ e--tov +_tiew Ama +'Mc -ten ^Y%~r f.v..n epvi I e%n ,- n^- nf w n1 + ~ - *a Of the total, R 8 million represents the undrawn balance of an existing Americam on a nd.,s c.s a 7 -- ,Is jJ,, 1 4 c__A. +J.l 'A a Ge m 'k-1. -411 1 -PIa,.aln ja. possible, be renewed. The balance of R 15 million, it is hoped, can be S ~ ~ ~ ~ ~ ~ ~ I VssL~. ...'lL JJ.'d± J1 J. . 11 U.. I MaW~ LIVIJ.V _L0 a.LQI OWJLtV YU0.LJ.L._L.Y VAJ . small loan from the U.S. which would be tied to the import of railway material. Any 'larger _Loan fLr om the UY.O. has bee --- e out by3 the Govrnmnt as a_ result4 of the application to South Africa of the Interest Equalization Tax and the rtjvdral Reve UI I- c I 1vu U.) U90t L)dllr'b±UV U*.Lg11 JLt:;1U1(F6U 1 1UW U.Q.. exports. South Africa has not made any foreign market issue since 1959,1/ and her access to capital markets in Europe and the U.S. is likely to remain limited. 72. No development plan for the public sector as a whole is prepared in South Africa, but at the mission's request the Treasury made a projection of capital expenditures of the central government for 1969/70. This showed expenditures of R 518 million in 1969/70 by comparison with actual capital expenditures of R 400 million in 1964/65, an increase of about 5% per annum. Resources estimated to be available in 1969/70 from the Public Debt Commis- sioners and from loan recoveries total $300 million, leaving R 218 million to be met from public borrowing or transfer from revenue account. In the light of the budget for 1965/66, these estimates must be regarded as conser- vative: the increase in capital expenditures in 1965/66 amounts to almost half the total increase estimated for the period to 1969/70 and, as regards financing, loan recoveries are projected at almost R 100 million in 1965/66 equal to the estimate for 1969/70. The Public nterprises 73. Although no development plan for the public sector as a whole is prepared, the principal undertakings have their own expansion programs. These programs, in general, appear to be of high priority. The Railways and Harbours Administration plans to spend on new capital works over the next three years R 630 million, of which R 360 million would be provided as a capital contribu- tion by the central government and the balance would come from the railways own resources. The railways have for many years barely been able to move the traffic offering, notwithstanding large investments in new capacity. This has been due in part to severe restrictions on the role of road transport, but with the greatly increased demands on the railways in recent years, these restrictions have been partly relaxed and further relaxations are contemplated, With developments now projected in the economy which will, inter alia, require the movements of greater quantities of bulk traffic over long distances, a stepping up of the rate of investment has become necessary. VIn October, 1965, since this report was written, Escom raised DM 50 million in Germany. - 27 - Furthermore, the capacity of the two principal ports--Durban and Capetown-- is now inadequate, and major expansion programs are planned. Construction has started, and heavy expenditures will begin in the next two years. 7. The expansion program of Escom is based on a projection of load growth of about 8% p.a. This is in line with erowth rates over the past decade. The projected increase in demand will require the addition of ap- Droximatelv OO.000 KW of new canacity in each of the next few years, and Escom plans to spend on new capital works an average of $ 80 million a year over the next five years. Eseom is reqnired by law to finance its expansion by borrowing, 75. Iscor is at present implementing a 10-year expansion program which i- omn+Aed tn n1stant RA 6n millinn- The nrnoam will be nnm- pleted by the early 1970's and over the next few years expenditures are esfJn+MA n+ My n-minu "n+n ^-P D? LA ,Cf4114v Anv1+ fe"am em a + or medium-term borrowing in 1966-67, Iscor expects to finance this pro- r,r -,t. &V111S .8 -Vt .JVV4L U UJA t . J_AArWV3 V..A.A. LJ I.A/ from about 2.7 million tons at present to 4.5 million tons, a rate of growth somewhat greater &U- .- _- a -P A--A- 4-1- -+ecde but Iscor's costs are among the lowest in the world, and it expects to 've ale. to exporUJt sLtefe In,1 ul-lu ±LPLL"_V CL JLU 1A UVI11 LAI W~it-, FCOL Ckt,u_"mo when local demand falls short of production capacity. 76. Sasol is also engeged in a program of extensions which are esti- mated to cost about R 90 m1ilion. The program is more than half coM- pleted and Sasol's own resources are expected to be adequate to finance the balance of the scheme. New plants have been or are being built to use Sasol's new products, and with the continuing rapid development of- the chemical industry in South Africa, further expansion and diversifi- cation of Sasol seems certain, 77. These are the largest single projects or programs in the public sector, apart from the Orange River FroJect for which the Government has direct responsibility, and which is presently estimated to cost more than R 500 million spread over a period which may extend to thirty or more years. 78. The Orange River Project is generally admitted to be of lower priority. It will take many years to implement and its full benefits can be expected only over a long period. Its first stage, estimated to cost about R 130 million, will comprise two major dams with associ- ated hydroelectric installations, the irrigation of almost 300,000 acres of new land and the provision of supplementary water for 70,000 acres of land already under irrigation, and the supply of supplementary water for domestic use to the city of Bloemfontein and some other smaller centers. - 28 - (7. Me scheme has become more attractive as a result of a plan to link the hydroelectric installations with a projected transmission line from the Transvaal to the Cape, where the future load growth would be met from power stations built on the Transvaal coalfields with a consequent saving of rail transport. Aith the upsurge in the economy and the pressure of demand on resources, the Government decided to slow the implementation of the scheme, cutting the 1965/66 budgetary pro- vision from R 20 million to R 15 million. 80. Although the amounts of capital to be invested by undertakings in the public sector over the next three to five years are large, a high proportion of the total will be provided by the undertakings from their own resources. The railways will rely on Government for almost half of their financing and, hence, indirectly on borrowing, but the main demand for finance from the market will come from Escom. The IDC is likely to borrow only relatively small amounts. 81. In the past, Escom has had little difficulty in raising money. At 31 December 1963 its loan capital amounted to R 612 million, and all but R 37 million of this was locally registered stock. Apart from three loans from the IBRD, Escom has borrowed from the Eximbank and the C.D.F.C. and made one public issue in Switzerland in 1959.1/Escom has normally made issues in the local market twice a year. In 1965 Escom will need to raise R 70 million, and in April it made an issue of R 32 million to which it subscribed R 12 million from its own resources, R 2.5 million was taken up by the Public Debt Commnissoners. ani 14 million by the private capital market, leaving a shortfall of just over R 2 million for which the Reserve Bank agread to suhrrib on nnndition that fhA__qP k should be repurchased from the Bank before May 31, 1968. Besides having some difficuLtv in raising its renuirAmints wi+h thn oynwr Aonnv irn capital over the past two years, Escom was forced to offer a higher re- turn The nfftetive vAild non +ha April 196< -locine as +s ovrn 6 1% above the yield on the first issue of 1963, and the yield may well be higher wbo~n 'sAm *ri P iA 8m4loni August,of thiP 4-, V. CONCLUSIONS NEED FOR FOREIGN BORROWING AND CREDITWORTHINESS 82, The riseon -^A ^1.,.4-.4- 1- U ee atr f--4 5'd.. W JJAV ZAC&Q U ~~ AL%.01JVL_ VJ.L gr a impor.Utmice in helping to maintain the 5% annual growth in real output of the econ- WS r ' J IA I AJVV.L L, IJ 4,411 1JC"0L;%%. V.L J1UUIJ,'b]J± y in the last 10 years, Although past estimates of gold output have always pOve coWrvtv an proucio ma . 4A WIL ..VS1y incrLe further in the Iut'ure, the industry now expects that output will level off and slowly decline afte 1966. me% 1 fugerum a fast growing to a stable or slowly de- clining goldmining industry must have a major impact on the future growth o. tne economy and on the prospects for foreign exchange earnings. 1/ f. fc)tnote Pa-)e 25. - 29 - 83. This was recognized in the Economic Development Program prepared by the South African Government in 1964. The program, an exercise in indicative planning, provides a model for economic growth over the period 1964-69. and considers the implications of different growth rates ranRing from Uhg through5V6 to 6% per annum. The Government has accepted as a target a arowth rate of 5!2. In the model. a *6Z growth rate would require a 7% annual growth of manufacturing industry to compensate for much slower rates of exDansion in mining and agriculture. Assuming an overall capital output ratio of about 3:1, it would also require a gross ihvestment rate of about 22% of gross domestic product, and, to provide needed imnorts with no net capital inflow, a 3.6% annual growth in merchandise exports in addition to an assumed 2.h annual Prowth in onld output. Tf- rontrarv to the assumption of the Economic Development Program, gold output declines from 1966. the growth in merchandiq P rnorts wold have to hp [C/ annua1v. A), J.Tidcrinri, b h-i .n nQt. na-pfn-ninvina r%f' +.hno i,A Afr-ica-n nnrinnmr n investment rate of 21% to 22% of the gross domestic product, although rather h ha h ntrmn +.hC 11o^1en 1P !3t meet n4w3 1 eNj - chauld be .+.in ha - n- it will be possible to finance this rate of investment from domestic savings, if. then sangs rate of+ the p1as d-ead 4s maintaind. T+ wii morea A4V ficult to achieve a 5.2% annual growth of merchandise exports, which would exports already in sight - of diamonds, copper, pig iron, iron ore, coal, amount by 1969 to less than R 200 million, and the prospects of expanding exports of manufacture-s appea Less favorable thlan. in ear-Lier-1 yearso as a. result of political changes in neighboring African states, in particular the dsoLuton of the RnoUean reuerauton. If the export target is not achieved, growth may be slower unless a substantial net inflow of capital should make possible a stepping up of the rate of investment. 0.-'T --t E. - - - g , r 0 w-, - - - th -a. u). Altnougn in terms ox tne Economic uevelopmenrr rrogram, grown as 5k could be achieved with no net capital inflow, this would still require a gross inflow averaging R 4o million a year to balance the amortization payments on existing debt to which South Africa is presently committed. If no capital inflow were forthcoming, South Africa coula suill meet its con- tractual obligations, but at the cost of a lower rate of growth (probably of the order of 5% p.a.), lower reaL income and a higher level of unemploy- ment among the less skilled. It is expected that the needs for skilled labor implied by a 5:!9 growth rate could be met partly by expanding training programs and partly by immigration. This growth rate envisages, however, 5% unemployment among non-whites in l69, and this does not reflect the large numbers mainly in agriculture who will be underemployed or whose producti- vity will remain low. Agriculture will, it is estimated, still absorb 35% of the economically active non-white population in 1969 as compared with 37% in 1963. 86. On economic considerations alone, South Africa could afford new foreign borrowings. The ratio of service payments on South Africa's pres- ent external public debt to 1964 foreign exchange earnings is 5.3% in 1965 and 2.7% in 1970. New external borrowing is likely to be moderate and the - j - burden of debt service light. South Africa has an excellent record of meeting her foreign debt obligations in the past. Despite this, South Africa has been able to borrow only limited amounts abroad in recent years other than on short-term because of political factors. 87. Doubts about South Africa's political future stem from fears of Internal upheaval or of external intervention. Internally, the present Government party is strongly entrenched and it has attracted in recent years increasing support among the white electorate. The opposition among non-whites is divided and poorly organized with many of the leaders in detention or exile. The security forces have been greatly strengthened, and there seems little prospect of serious upset in the foreseeable future. 88. Externally, action against South Africa may take various forms. Several African and non-African states have taken economic measures. These have included prohibitions on exports to, and imports from, South Africa. While these measures have caused some difficulties for particular South African industries at particular times, their overall impact on the South African economy has been very small. This is partly because South Africa's trade with other African states is a minor part - less than 10% - of her total foreian trade: in addition. the bulk of her trade with states in Africa is with neighbouring countries which have not imposed sanctions. The impact of any further trade sanctions would depend on the extent to which they were supported by South Africa's major trading partners. In the absence of such develonments South Africa's economic prosnects are favourable, and the country can be regarded as creditworthy for some additional r-ytPrnq1 hnrrnwina_ LiT U TABLES Table No. External Public Debt 1. External Public Debt Outstanding as at December 31, 1964. 2. Estimated Contractual Service Ppyments Population 3. Economically Active Population: 1946, 1951, 1960 National Income and Production 4. Gross National Product: 1948 - 1964 5. Net Domestic Product at Factor Cost: 1947/48 - 1963/64 6. Gross Savings and Capital Formation: 1948 - 1964 7. Agricultural Production: 1947/48 - 1963/64 8. Pastoral Production: 1947/48 - 1963/64 9. Principal 1ine Products: 1948 - 1964 10. Index of the Volume of Manufacturing Production: 1957/58 - 1964 Foreign Trade and Payments 11. Composition of Exports: 1958 - 1964 12. Imports by use and Stage of Processing: 1957 - 1963 13. Direction of Foreign Trade A. Balance of Payments: 1948 - 1964 15. Terms of Trade: 1948 - 1964 Public Finance 16. Cnval G,vernment. - Current Revenn and Exnenditure: 1960/61 - 1965/66 17, Central Government - Canital Expenditure: 1960/61 - 1965/66 Monev and Prices 18. Mloney and Credit: 1948 - 1964 19. indices of Retail and Wholesale Prices: 1959 - 1964 Table 1: SOUTH AFRICA - EXTERNAL MEDIU4 AND LONG-TERM /1 PUBLIC DEBT OUYISTANDING INCLUDING UNDISBURSED AS OF DECMBMER 31, 1964 Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) Debt outstanding December 31, 1964 Item Net of 1ncluding undisbursed undisbursed TOTAL EXTERNAL PUBLIC DEBT 262.h27 330.h27 ruu±L4c±_Y-'. ueU Uo"cu; /4 -LL4 9 J7 ULLY-) rrivately-placed debt j,yo YY_,_>o Loans from banks 31,596 99,596 IBRD loans 74,237 74,237 U.S. Government loans 14,501 14,501 Export-import Bank ,501 14,501 /1 Debt with an original or extended maturity of one year or more. 72 Net of accumulated sinking funds of $ 1,181,000. Source: Statistics Division, IBRD-Economics Department Table 2: SOUTH AFRICA - ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL MEDIUM AND LONG-TERM PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 196 /1 Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) GRAND TOTAL F,,RT OUTST (BIBIN OF PERIOD) PAYMENTS DURING PERIOD TW.T.TTDTNG AMORTT- YEAR UNDISBURSED ZATION INTEREST TOTAL -104 n Lo7 A1 goo 11 M-1 0, 4)i 11J- 5 ~4'- I ,-,1 1- 11 '4 1966 239,058 16,090 10,736 56,826 1ToA7 foo 091OGo. A oAp -1 4177 1968 139,816 22,181 6,529 28,710 .L7 -P7 -L-L I ILr- ,VJ)u J,4u r 1970 87,100 43,365 3,895 47,260 Sn741 1. ) -1~± 170 ff n n-113in 1. 1972 35,482 12,079 1,560 13,639 1973 23, 40.3 4,627 1,2 5748 1974 18,776 2,079 981 3,061 1976 14,000 14,000 770 14,770 PUBJLtLI-ISSULD BUNDb DEBT OUTSTANDING PAYMENTS DURING PERIOD (BEGIN OF PERLOD) AMURTI- YEAR GROSS NET ZATION INTEREST TOTAL 1965 143,274 142,093 15,006 5,951 20,957 1966 128,443 127,017 6,394 5,503 11,898 1967 121,568 120,537 32,853 4,677 37,530 1968 88,869 87,613 6,807 3,947 10,754 1969 81,456 80,721 19,823 3,233 23,056 1970 60,875 60,875 33,313 2,579 35,892 1971 27,562 27,562 2,079 1,355 3,434 1972 25,482 25,482 2,079 1,260 3,339 1973 23,403 23,403 4,627 1,121 5,748 1974 18,776 18,776 2,079 981 3,061 1975 16,696 16,696 2,696 887 3,583 1976 14,000 14,000 14,000 770 14,770 Table 2* CATTrpU AVDTnA MQMT7,/rAnVr) PAMMDAfITTAT CDTDT' DAYMMc AAT pvmpDnTAT ACMWLc WJkJ LA:±~LJ ~ J.V.LJ VJV.L&UMAV JUJ WAJ 4LVLU VLL'1;1.LL.J V.IY r£A,cJ1yi4j MEDIUM AND LONG-TERM PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED As AQ^' r WNIn"M"n , l t /I II - rTm Y 1i0 VK ULLL'DD. J.Lj .L7U 71 LUUUMef Debt Repayable in Foreign Currency "in thousands o U.S. dollar equivalents) PRIVATELY-FLACED DEBT DEBT OUTST (BEGIN OF PERIOD) PAYMENTS DURING PERIOD INCLUDING AMORTI- YEAR UNDISBURSED ZATION INTEREST TOTAL 1965 89,596 4,602 2,727 47,329 1966 44h,994 21,269 1,966 23,235 1967 23,725 2,935 1,286 4,222 1968 20,790 3,075 1,132 4,207 1969 17,714 2,571 975 3,546 1970 15,143 2,571 838 3,l1 1971 12,571 2,571 702 3,274 1972 10,000 10,000 300 10,300 IBRD LOANS DEBT OUTST (BEGIN OF PERIOD) PAYMENTS DURING PERIOD TNCTUDTING AMORTI - YEAR UNDISBURSED ZATION INTEREST TOTAL 196q 7h.217 18.Ch9 5.710 22.279 1966 55,688 15,228 2 18,018 1967 )h0.q9 11.9)9 2.002 1,9i1 1968 26,510 10,729 1,269 11,998 1969 14L781 6 197 711 7,An 1970 9,384 5,782 426 6,208 1971 3,602 3A6g 'A5 3758 Table 2: SOUTH AFRICA - ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL MEDIUM AND LONG-TERM PUBLIC DEBT OUTSTANDING INCLUDING UNDISBTRSED AS OF DECEMBER 31, 196 /1 (coNT.) Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) US GOVT. LOAN - EXM DEBT OUTST (BarTN OF PERTnn) PAYMENmTS nTTRTmrPs PPRTO INCLUDING AMORTI- YEAR TflnTTRTP.Pl 7ATTOn TN'TPRrT TOTAT 1965 14,501 3,142 633 3,775 1oA 11 Ifo 3 ,10 97A 2 A7C 1967 8,160 3,257 317 3,574 I0AA L onA 1 ff70 1P1 1 7 If I4P Z-0 J I - 'JJ. ,I - 1969 3,333 1,633 117 1,750 1o1r OWN 4nof I i4on &1 1 7Cn / . IIl±UUt! zjt:1V1QU on ajL UUWJ L.L5ueu -Ln JaU±Lt -L P1-VPcL-U iay -L±7%) except DE h0,000,000 from a Syndicate of German Banks for which the amor- tization terms are not available. Source: Statistics Division, IBRD-Economnics Department. Table 3: SOUTH AFRICA - ECOINIICALLY ACTIVE POPULATI N: CENSUS YEARS 196, 19 1, 1960 (thousands) Census Mixed Year Total khites Race Asians Africans Agriculture, forestrv. 1946 1,597 168 97 11 1.268 and fishing 1951 1,509 145 98 13 1,252 1960 1.701 118 119 10 IMining and quarrying 1966 h98 3 1 9), 1951 510 57 h 1 449 1960 606 62 1 539 Mainfct-i-.lring 19ng6 1 Lo 17 163 1951 502 183 70 22 227 '190 479 29 97 32 19,6 153 / 50 227 1951 240 67 39 2 132 VI -4196 2784 72 k2 2r16 E i gas6CID, 1 LIk water, etc. 1951 25 7 2 - 17 1960' 39 1 3 - 2 Commerce and finance 19h6 2h9 1h0 18 19 71 1951 328 179 25 23 101 1960 458 23h 39 27 158 Transport and 196 207 122 ih 2 69 commitments 1951 203 113 14 2 73 1960 214 122 17 4 72 Services 196 961 178 98 13 673 1951 1,074 204 111 17 741 1960 1,228 252 ihl 22 813 Other, including 1946 232 39 hh 12 137 unemployed 1951 202 28 42 14 118 1960 92 h 90 27 335 Total 1946 h,221 888 3h9 79 2,905 1951 h,593 983 405 94 3,110 1960 5,696 1,140 548 126 3,881 Economically active as 19h6 37.0 37.4 37.6 27.8 37.1 % of total population 1951 36.2 37.2 36.7 25.8 36.3 1960 35.6 36.9 36.3 26.h 3.5.5 Source: Bureau of Statistics: Statistical Yearbook, 1964. Tnhl P h* 5-IT AWRTl - ROR NATTONAT WA T.PROHMT Tnriirldin r HqA Tcinn nnrl n l n nr] anr- m 7.j7In rlA (R million at current market prices) frivate covnsumptoun A.) J --u cyc yoCuv fpu -)'J. --u - , )7) - 4-)4U 47 _U Government consumption 234 387 530 558 590 635 735 825 930 Gross uumensi capital formation 558 866 1105 958 1135 1114 1126 1383 1638 Exports lessupou -r_U J-4 CCU Leu A~iU U4 Gross domestic expenditure 2318 3.54 4915 52t17 U559 o0 6280 c877 66f Net factor income from abroad -353 -159 -192 -191 -194 -219 -192 -196 -209 Gross National Expenditure 196>5 3395 4723 502' 5365 55 0 8OUO 681 7.41 Percentage Distribution Private consumption 77.7 68.6 69.0 67.0 67.4 65.0 64.6 65.0 67.0 Government consumption 11.9 11.4 11.2 11.1 11.0 11.4 12.1 12.3 12.5 Gross domestic investment 28.4 25.5 23.4 19.1 21.2 20.0 18.5 20.7 22.1 Exports less Imports - -0.8 0.3 6.7 4.1 7.6 7.9 4.8 1.4 Total gross domestic 118.0 104.7 103.9 103.9 103.7 104.0 103.1 102.8 103.0 expenditure Net factor income from abroad -18.0 -4.7 -3.9 -3.9 -3.7 -4.0 -3.1 -2.8 -3.0 Gross National Expenditure 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: S.A. Reserve Bank: Quarterly Bulletin of Statistics Table 5: SOUTH AFRICA - NET DOMESTIC PRODUCT AT FACTOR COST Including SWA, Bechuanaland, Basutoland and Swaziland (Percentages) 1947/48 1952/53 1957/58 1961/62 1962/63 1963/64 Agriculture, forestry, and fishing 16.2 15.4 11.6 10.7 10.4 9.2 Mining 10.3 11.7 12.9 13.6 13.1 12.5 Manufacturing (private) 21.3 23.8 23.9 24.4 25.6 27.8 Commerce 15.7 14.5 13.9 12.6 12.8 12.9 Transport 9.0 7.7 8.0 7.6 7.6 7.7 Public authorities ( 9.8 9.8 10.C 1O.L 10.3 Miscellaneous business ( 27.5 3.L 11.0 L.C .3 h.2 (public) ( Other ( 13.7 15.9 16.2 15.8 15.4 100-n I1n- 100.0 inn-n inn-n inn-n Source: S.A. Reserve Bank: Quarterly Bulletin of Statistics Tnblp 6* SOUTH AFRTCA - GROSS SAVTNS AND CAPTTAL FORiATTON Tnclding ,TA Bchnanand, Bantoland and Sanziland (R million) Savings 1948 1953 1958 1960 1961 1962 1963 1964 a) Personal savings ( 237 238 263 430 568 415 293 b) Corporate savings ( 81 160 182 189 209 238 349 c) Current surplus of public autnorities anu social 5o 112 13U 222e 174 9y 2o5 27 security funds d) Depreciation allowances 125 264 h24 489 524 557 593 642 Gross domestic savings 218 694 952 1,156 1,317 1,33 1,531 1,560 Less balance on current account -341 -172 -153 21 203 307 148 -78 Total funds available 559 866 1,105 1,135 1,114 1,126 1,383 1,638 Capital formation a) Public authorities 151 246 437 362 372 363 432 474 1) Central government 87 138 270 178 175 161 218 251 2) Provincial governments 24 h1 57 69 77 84 92 98 3) Local authorities 4o 67 110 115 120 118 122 125 b) Public corporations 24 98 76 63 75 86 123 124 c) Private enterprises 384 522 592 710 667 677 828 1,040 1) Residential buildings 68 107 104 122 102 87 112 152 2) Farming 88 109 104 108 103 122 118 120 3) Mining 46 120 109 1Wh 152 114 103 148 4) Manufacturing 104 75 157 176 181 193 287 421 5) Commercial and other 66 97 10% 145 117 146 187 172 6) Transfer costs 12 14 lh 15 12 15 21 27 Gross domestic investment 559 866 1,105 1,135 1,114 1,126 1,383 1,638 Source: S.A. Reserve Bank: Quarterly Bulletin of Statistics Table 7: SOUTH AFRICA - AGRICULTURAL PRODUCTION Deciduous Maize Wheat Sorghum Citrus fruits fruits Sugarcane Volume Gross Volume Gross Volume Gross Volume Gross Volume Gross Volume Gross 1,000 Value 1,000 Value 1,000 Value 1,000 Value 1,000 Value 1,000 Value tons R mill tons _R mill tons R mill tons R mill tons R mill tons R mill 1947/48 3,212 70.7 538 21.4 306 7.8 234 6.5 212 18.2 4,555 ll.4 1952/53 3,376 107.7 598 30.7 339 11.0 280 14.1 256 23.1 5,731 22.C 1957/58 3,704 103.14 869 39.5 205 6.9 353 22.5 371 32.C 8,604 33.8 1958/59 4,150 120.0 690 36.2 286 9.0 337 20.2 368 29.6 10,257 40.9 1959/60 4,32 133.7 816 43.4 263 9.0 526 17.6 408 30.9 9.123 38.3 196c)/61 5,314 "161.2 89 46.0 369 12.1 474 23.7 444 34.6 8,650 38.1 1961/62 6,65. 184.5 962 52.5 202 6.7 54C 24.0 449 38.0 9,384 41.4 1962/63 6,718 191.0 774 39.9 3:22 10.9 558 24.0 h98 39.2 10,749 46.3 1963/64 4,753 1141.3 972 50.9 264 8.9 630 26.0 512 41.5 10,970 48.2 Source: Data supplied to the Mission Bureau of Statistics Table 8: SOUTH AFRICA - PASTORAL PRODUCTION Wool Hides and Skins Cattle Woolled sheep Non-woolled sheep Volume Value Volume Value Number 1,000 Number 1,000 Number 1,000 1,000 tons R mill. R mill. 1947/48 94 39.4 n.a. 2.4 12,470 25,767 6,845 1952/53 120 113.1 n.a. 7.7 11,655 31,401 4,591 1957/58 133 95.9 n.a. 6.6 12,062 34,360 3,919 1958/59 137 74.4 n.a. 7.2 12,327 33,693 4,158 1959/60 140 92.7 n.a. 10.5 12,295 34,534 4,256 1960/61 138 82.1 n.a. 9.2 12,527 n.a. n.a. 19,61/62 148 89.7 n.a. 10.4 n.a. n.a. n.a. 1962/63 139 94.7 n.a. 12.0 n.a. n.a. n.a. 1963/64 142 116.0 n.a. 13.5 n.a. n.a. n.a. Source: Data supplied to the Mission Bureau of Statistics Table 9: SOUTH AFRICA - PRINCIPAL MINE PRODUCTS Gold Diamonds Coal Chrome Ore Copper Ore Asbestos Uranium-/ Vo u e lT mil e Value Volume Valuel Volume Valuel Volume Value! Volume Value= Volume Value- Volume Value ozs. R mill. 1,000 car. R mill. mill. tons R mill. 1,000 tons R mill. 1,000 tons R mill. 1,000 tons R mill. bons R mill, 1948 11.6 199.8 1,382 20.4 26.5 18.3 566 1.7 33.8 6.2 L5.7 2.5 - - 1953 11.9 295.1 2,718 28.0 31.4 32.9 799 5.5 39.8 18.6 94.8 9.5 - 7.7 1958 17.7 440.0 2,702 31.1 W0.9 47.2 696 7.9 54.9 17.8 175.6 19.1 - 107.3 1959 20.1 500.3 2,838 31.3 40.2 49.4 750 5.7 53.9 18.8 182.6 19.2 - 97.5 1960 21.4 536.0 3,141 33.9 42.1 55.1 851 6.0 50.8 21.4 175.9 21.6 - .5 1961 22.9 5714.9 3,788 38.4 43.6 59.6 990 6.7 58.0 20.6 1J94.8 22.3 - 79.3 1962 25.5 636.6 3,918 36.5 45.5 65.1 1,0C6 6.0 51.1 18.0 221.3 23.1 - 73.8 [963 27. 686.3 4,376 36.6 46.8 67.7 873 4.9 60.8 21.8 205.7 22.3 - 66.8 1964 29.1 730.5 4,450 4.2 49.5 72.2 936 4.6 63.8 25.9 215.5 24.7 - 58.1 1/ Sales Atomic energy minerals Source: Statistical Yearbook 1964 and data supplied to the mission Table 10: SOUTH AFRICA - INDEX OF TE PHYSICAL VOLUME OF MANUFACTURING PRODUCTICN (1956/57 - 100) Total Paper and Leather & Chemicals & Manufacturing Wearing Paper pro- leather chemical pro- - roduction Food Beverages Tobacco Textiles Apparel,etS. Furniture ducts Printing products ducts 1957/58 106.0 109.7 111.1 94.2 102.9 102.5 110.5 104.4 102.6 100.2 104.2 1958/59 107.8 112.7 122.7 92.2 106.3 102.4 106.5 106.3 101.7 99.7 109.3 1959/60 114.8 118.2 126.7 94.7 138.8 105.2 109.5 118.0 109.6 90.2 119.8 1961 122.0 122.9 130.4 93.5 163.6 117.6 103.5 137.8 135.1; 96.7 129.7 1962 130.3 127.3 137.7 91.4 177.7 119.3 105.4 155.0 1h.9 100.3 12.5 1953 148.3 135.0 155.9 98.6 188.4 129.3 118.9 152.9 169.,5 107.7 156.5 196h (Jan-Nov) 171.11 140.6 177.5 105.3 225.8 145.6 133.3 199.8 189,9 120.7 178.0 Products Non-metallic petroleum mlneral Basic metal Metal Electrical Transport and coal 2roducts industries ructs Machiner machineZy uIpment 1957/56 109.3 111.2 107.1 105.3 104.3 103.4 105.3 1958/59 119.0 109.6 107.4 103.3 113.1 1011.9 103.9 1959/60 123.7 112.4 126.4 101.8 113.6 111.,7 88.9 1961 138.6 112.8 134.8 105.8 122.0 120.8 104.2 1962 149.6 113.3 139.5 115.3 131.4 129.6 130.6 1963 182.4 127.7 165.9 137.8 14.6 155.4 179.4 1964 (Jan-Nov) 288.5 157.7 185.3 167.2 159.1 185.2 232.0 Source! Bureau of Statistics: Monthly Bulletin of Statistics, Iable 11: SOUTH AFRICA - CO1,"SITION OF EXPORTS Including SWA, Bechuanaland, Basutoland and Swaziland (R millions: f.o.b.) 1958 1959 1960 1961 1962 1963 1964 Merchandise exports Agricultural and pastoral products 32. 33J.3 332. 39 81 J30.7 )700 n. of which: wool 7B.0 B5.8 88.0 101.7 99.7 115.9 122.h maize 35.7 15.2 20.h 38.7 72.2 88.3 53-1 fruit 67.5 65.2 69.2 76.1 78.9 82.8 94.3 sugar and reparations 16.1 16.8 17.0 19.5 32.8 )O.3 7.2 Minerals, earthenware, glassware 89.0 105.5 105.2 119.9 110.7 13. n.a. of which: diamonds 61.4 76.2 68.9 83.8 73.0 86.0 95.1 asbestos 20.8 21.2 25.7 23.8 25.3 23.6 27.9 Teta,l.s,- machinery andl vphitcles- 22.6 261. 2)7-3. 252.n7 236. 22n 1. n.a. of which: uranium 107.3 107.7 108.5 79.4 74.h 67.0 8.-1 copper i16.8 19. 2n. 21.9n " 18. 28. 36.o0 1 iron and steel 14.9 38.h 33.9 4l.1 4l.5 40.7 37.6 Other merchandise 78.4 88.2 88.2 95.1 92.0 91.9 n.a. Total merchandise 715.2 789.0 799.5 852.8 869.4 915.8 955.0 CoIU output UUV.2 5U3.4 3 575.6 631.8 000. 4 735.0 Total domestic exports 1,155.4 1,292.4 1,329.7 1,h28.4 450i.,2 I1,6C.2 4690.6 Composition of Exports (Percentages) Merchandise exports Agricultural and pastoral products 28.1 25.9 25.0 27.0 28.7 29.3 n.a. of which: wool 6.B 6.6 6.6 7.1 6.6 7.2 7.2 maize 3.1 1.2 1.5 2.7 4.8 5.5 3.1 fruit 5.8 5.0 5.2 5.3 5.3 5.2 5.6 sugar and preparations 1.h 1.3 1.3 1.4 2.2 2.5 2.2 Minerals, earthenware, glassware 7.7 8.2 7.9 8.4 7.h 8.2 n.a. of which: diamonds 5.3 5.9 5.2 5.9 L.9 5.h 5.6 asbestos 1.8 1.6 1.9 1.7 1.7 1.5 1.7 Metals, machinery and vehicles 19.3 20.2 20.6 17.7 15.7 13.9 n.a. of which: uranium 9.3 8.3 8.2 5.6 . _ .2 3- . copper 1.5 1.5 1.6 1.5 1.2 1.8 2.1 iron and stPRl 1. 3.0 2.5 29Q 2. 2.5 2.9 Other merchandise 6.8 6.8 6.6 6-6 6 5.7 .a. Total e 61.9 61.1 60.1 59.7 57.9 57.1 56.5 Gold output 38.1 38.9 39.9 40.3 42.1 42.9 43.5 Total domestic exports 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Department of Customs and Excise: Foreign Trade Statistics. Table 12: SOUTH AFRICA - IMPORTS BY USE AND STAGE OF PROCESSING (R millions - f.o.b.) Description 1957 1958 1959 1960 1961 1962 1963 TotallY 1,099.6 1,110.9 977.3 1,111.1 1,0004.8 1,022.3 1,212.7 Crude materials 99.6 92.1t 107.6 112.8 108.0 110.9 138.7 Materials for the production of human food, of beverages and tobacco 10.9 11.9 26.8 18.9 13.0 13.0 28.0 Materials for agricultural production 4.6 4.2 3.7 4.8 5.4 6.0 6.1 Industrial and comnercial materials 70.7 60.h 61.3 74.6 75.2 75.13 82.9 Animal and vegetable oils and fats 0.2 0.1 - - 0.1 - - Operating supplies of fuels and lubricants 11.5 - 14.3 13.2 12.0 12.5 14.0 18.4 Food, beverages and tobacco 1.6 1.6 2.6 2.5 1.8 2.2 3.3 Processed or manufactured materials 767.0 795.8 674.6 777.1 710.8 728.7 947.5 Materials for the production of human food, of beverages and tobacco 0.4 0.! 0.4 0.9 1.1 0.7 0.8 Materials for agricultural production 3.4 3.7 4.4 5.0 3.4 3.1 5.8 Industrial and comercial materials 364.3 353.4 308.3 381.5 322.5 340.1 446.1 Animal and vegetable oils and fats 8.0 8.8 8.3 7.9 7.2 6.1 6.3 Operating supplies of fuels and lubricants 52.8 42.h 39.1 38.7 39.0 4O.0 55.7 Capital equipment 3C6.4 354.I 282.1 308.8 305.6 307.6 396.0 FoodY beverages and tobacco 31.4 32.5 32.,0 34.4 31.9 31.2 36.8 rticles ready for retail sale or consumers use 232.8 222.1 194.8 220.9 185.7 182.2 125.5 Durable goods 76.9 84.1 62.3 74.7 61.2 58.6 64.7 Non-durable goods 155.9 138.3 132.1 146.1 12h.4 123.7 60.8 Live animals 0.4 0.3 0.3 0.h 0.4 o.5 0.9 LI/ Including Settlers' effects, Government Stores and parcel post. Source: Department of Customs and Excise Table 13: SOUTH AFRICA - DIRECTION OF FOREIGN TRADE (Percentages) 1955 1960 1961 1962 1963 196a United Kingdom Imports 34.6 28.4 29.1 30.3 29.8 28.4 Exports 30.9 27.9 29.9 27.8 30.0 31.5 E.E.C. Countries Imports 13.1 18.9 20.4 19.4 19.7 20.3 Exports 21.2 17.3 19.3 20.9 21.3 20.3 United States and Canada Imports 25.0 22.9 20.3 19.1 20.2 22.1 Exports 8.5 7.7 9.0 10.2 10.4 9.9 Rhodesia, Zambia and Malawi Imports 3.1 2.6 2.6 2.7 2.7 3.1 Exports 14.8 13.2 11.4 9.7 8.3 8.4 Other African States Imports 4.4 4.3 4.3 4.2 4.0 3.0 Exports 4.8 4.5 3.8 4.0 3.6 3.4 Rest ofl World Imports 19.8 22.9 23.3 24.3 23.6 23.1 Exports 19.8 29.4 26.6 27.4 26.4 26.5 Total Imnorts.V 100.0 100.0 100.0 100.0 100.0 100.0 Total Exports2/ 100.0 100.0 100.0 100.0 100.0 100.0 1/ Provisional figures Source: Department of Customs and Excise Table 14: SOUTH AFRICA - BALANCE OF PAYMNTS Including SWA, Bechuanaland, Basutoland and Swaziland (R millions) Current Account 190 1953 1958 1959 1960 1961 1962 1963 1964 Merchandise: Imports f'.o.b. -71. -860 -1,129 -995 -1,127 -1,:108 -1,043 -1,296 -1,589 Exports f.o.b. 289 599 774 877 879 931 952 1,017 1,082 Trade balance -261 -.3 -18 - Net gold output 200 306 [40 509 530 576 632 688 736 Freight and insurance (net) - 72 - 75 83 - 69 - 73 -66 -62 -85 Travel (net) - 9 10 - 2 -15 -13 -9 -307 Investment income (net) - 58 -131 ..152 -14! -156 -178 -153 -158 Other current items (net) 10 -2 7 2 -20 -27 -5 -9 Balance on current account -341 -172 --153 16 21 203 308 148 -78 Cmmissions a19d errors-1 19 18 15 -13 18 16 16 16 Capital Account Private capital: Long-*term: Direct investent (net) 19 15 -20 -12 - 01 25 2/ Stock Exch2nge transactions )173 2 - 2 - 42 -79 33 50 88 - 73 Other 2 - 2 - 69 -30 5 -21 - 23 15 Short-term (net) 2 -23 -25 7 39 ) 35 Total- Private 173 120 59 - 39 -152 -65 -75 -97 - 62 OffiCia1 arid Bankinig Long-term 1 -3 40 - 18 11 -5 -28 -16 --13 Short-term - - - 16 1 -8 -08 128 24 Gold and foreign exchange 3/167 59 - 9 - 80 132 -107 -188 -87 89 Balance on capital account 341 172 129 -151 - 8 -.185 -319 -172 38 / InclLded in private capital Included in "Other private long-term capital" OthIncrease -, 3ecrease0 Source S.A. Reserve Bank: Quarterly Bulletin of Statistics Table 15: SOUTH AFRICA - TERMS OF TRADE (1953 = 100) mrEporusv ±ermis 01 Traue Volume Unit value volume Unit value Excl. incl. index index index index gold gold 1948 il 74 73 66 89 91 1953 100 100 100 100 100 100 1958 126 103 156 88 86 90 1959 115 100 176 87 85 91 1960 129 101 182 85 84 89 1961 120 99 195 84 85 91 1962 122 98 202 83 85 91 1963 144 102 208 84 82 88 196 Jan/Sept. 175 100 207 88 88 92 +ExcludinR aold Source: South African Reserve Bank - Quarterly Bulletin of Statistics. Table 16: SOUTHAICA - CENTRAL COVERNMENT: CURRENT REVENTUE AND EXPENDITURE (R million) Current Revenue 1960/61 1961/62 1962/63 1963/64 1964/65 1965/66 Estimates Direct taxes 359.3 373.1 381.2 464-9 531.4 576.2 Indirect taxes 236.7 223.4 293.7 333.9 385.0 395.0 Posts, telegraphs and telephones 84,.9 90.3 95.1 102.6 111.3 112.5 4iscellaneous 86,,4 C.2 95.7 108.3 109.5 123.3 767.3 777.0 865.8 1,009.7 1,137.2 1,207.0 Less standing appropriations 29.8 35.3 39.2 45-8 50.0 50.1 737.5 741.7 826.6 963.8 1,087.2 1,156.9 Current Expenditure National security 91.2 122.1 177.2 175.8 280.9 300.2 Social services 291.2 303.8 332.0 369.6 411.0 457.4 Economic services 113.6 130.9 125.0 123.6 135.5 113.9 Posts, telegraphs and telephones 59.8 61.4 64.6 72.2 76.9 80.4 Public debt 41.3 43.6 4..4 50.6 56.3 72.2 General administration 61.4 63.3 68.6 75.5 90.2 102.8 Total 658.9 725.3 811.8 867.3 1,C51.8 1,126.9 Current surplus 79.1 16.1 1.8 16.5 35.4 300 Source M'inistry of Finance Table 17: SOUTH AFRICA - CENTRAL GOVERNMENT, CAPITAL EXPENDITURE (R millions) Exoenditure on Loan Account 1960/61 1961/62 1962/63 1963/614 1964/65 1965/66 Estimates Railways, Airways, Harbours 71.9 59.2 70.,O 69.8 119.5 120.0 Telegraphs, Telephones, Radio 17.6 20.6 20.7 24.6 28.9 29.0 dater affairs 11.3 12.7 14.,7 19.7 30.0 40.5 Housing 14.4 19.1 15.0 11l4 28.0 49.0 Bad< administration and development 1.5 0.5 10-5 25.6 33.6 43.3 Other 78.0 83.1 81.9 131.6 159.6 164.8 Total expenditure 194.7 195.2 212.8 282.7 399.6 147.6 Financed from Opening balance on loan account 46.2 38.L 45.8 45.4 10.6 Net loans raised 67.9 108.7 151.4 175.4 271-,5 204.4 Loan recoveries and other credits 49.7 51.9 61.1 72.5 80.l 94 Revenue surplus credited to loan account 32.3 41.9 - - 18,o l-LC.O Amount transferred from revenue account 37.0 - -30.0 Loan levy - - - - 13.3 233.1 240.9 258.3 293.3 360.2 447.7 Closing balance on loan account 38.4 45.8 45.4 10.6 (-)19.4 0.1 Source: Ministry of Finance Table 18: SOUTH AFRICA: MONEY AND CREDIT (R Millions) Assets and Liabilities of the Banking System Assets Liabilities Foreign Domestic Credit Year Assets Govt. Private Sector Money Quasi-Money Other items net)T (ne t) (n t) 1968 304 267 355 793 104 29 1950 338 386 341 790 235 Io 1952 261 ho5 426 816 255 21 1954 300 4l5 578 880 402 11 1956 279 433 691 873 502 28 1958 172 516 770 871 580 8 1959 309 451 818 916 665 -3 1960 155 416 989 883 660 16 1961 252 h2 985 908 762 9 1962 475 h57 1.007 1.o6 886 -2 1963 557 338 1,177 1,206 903 -36 196h h67 379 1.-22 1 311 1.097 _), Source: International Financial Statistics Table 19: SOUTH AFRICA - INDICES OF RETAIL AND WHOLESALE PRICES (1953 = 100) Retail Wholesale All goods Domestic Imported 1959 1 107.1 110 . 10. 6 1960 117.0 108.5 112.3 103.4 1961 110 110. . ii. & in. 3 -L-L/ . r-..L .L .; -L4. uJ .LV.J .) 1962 121.0 111.1 115.0 106.0 1 nn~ * 1' ý i' -in I. n ',~ £ *1 n,7 ri -L 4c- L-L . -LLU. U -L * .i 19n3 12. 112. 9 16. 1 07.7I 7,1 c. iarch I20.± .. .2LI 105. June 121.2 110.8 114.7 105.8 ,ep tnember 12.L.O -L.LO.6 U 106.L December 121.8 112.1 117.5 107.1 1963 March 122.0 111.5 115.4 107.5 June 122.0 112.3 116.5 107.6 September 123.2 113.3 118.5 107.8 December 123.1 113.3 117.8 108.9 1964 March 124.0 113.3 117.2 109.5 June 124.8 114.3 118.6 110.1 September 127.0 116.3 121.8 111.2 December 128.1 117.6 123.8 111.9 Source: South African Reserve Bank.