Page 170 - SARB: 100-Year Journey

There is another side to the 2008−09 crisis which is often overlooked, and that is how it affected the government’s capital raising. That task fell on Lungisa Fuzile, who in 2008 was the Deputy Director-General responsible for asset and liability management at the National Treasury. In 2011, Fuzile succeeded Kganyago as Director-General at the fiscus.
Fuzile said his task had been made easier, despite the crisis, by his predecessors who had worked hard to build South Africa’s profile and credibility.
Former National Treasury Director-General Lungisa Fuzile. /Mike Hutchings/Reuters via Alamy
“Instead of facing the challenge of a shortage of capital, we had more capital flowing in and the currency strengthened considerably. The nexus of the calibration of monetary policy and fiscal policy in a coordinated manner between the two institutions ensured that we were this attractive destination to foreign investment into bonds,” Fuzile said.
At the time, Fuzile and Mminele co-chaired the standing committee on banking and financial markets group.
“Thank God, we didn’t have a bond auction ... [that] actually failed. But we had a few bond auctions where we ended up having to take the money at high prices. We then made adjustments, for example, in relation to the sterilisation deposits,” said Fuzile.
The National Treasury and the SARB had an agreement on the sterilisation deposits which was intended to manage any potential shortfalls in the money market, “and, therefore, ensuring that monetary policy remained effective,” Fuzile added.
“It may not be convenient for the SARB to, sometimes, allow us to dip into the sterilisation deposit. I think, [we] were raising about R11 billion a week at that time in the different instruments: Treasury bills, inflation-linked bonds and fixed-income bonds,” Fuzile explained.
“We revised the agreement [with the SARB] ... to allow a situation where, temporarily, we could access the sterilisation deposit. Needless to say, we never drew down the sterilisation deposit throughout my tenure as Deputy Director-General for asset and liability management, and as Director-General of Treasury,” Fuzile recalled, to his relief.
From a National Treasury point of view, the 2008−09 crisis underscored how significant South African banks were for the rest of Africa.
“Momo [Momoniat] and I, at the Treasury; Lesetja and Daniel, at the SARB; pursue[d] the conversations on the direction of this financial system,” said Fuzile, and added, “We were clear that South Africa had to be at the cutting edge of reforming its financial system.”
“Of course, the fact that Lesetja, who had been part of the policymaking process, [was] at the SARB, as Deputy Governor and, later, Governor, meant you had an all- rounder represent South Africa in any conversation. I say this with respect to everyone involved,” Fuzile said.
160