South Africa’s government said it plans to establish a sovereign wealth fund to help manage the country’s foreign reserves and the value of the currency.
The proposal is contained in the government’s new economic growth strategy, which was released Tuesday and aims to create 5 million jobs over the next decade. A broad outline of the plan, which was drafted by the Economic Development Ministry, was first released Oct. 26.
“The document recognizes the challenges of an uncompetitive currency and sets out clear steps for government to address the impact of the rand on the economy and jobs,” the ministry said in a statement. “This includes a somewhat looser monetary policy with lower interest rates, greater building of foreign reserves and a sovereign wealth fund to manage foreign reserves more actively.”
The plan gave no details of the likely size of the proposed fund or when it is likely to be set up, saying only that it could function as an African development fund that “invests reserves in productive projects with a higher yield than investment in developed-country bonds.”