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COSATU CALLS FOR TIGHTENING OF FOREIGN EXCHANGE RULES

By NBF News

The South African union federation COSATU, a partner in the country's governing alliance, called on Tuesday for a reversal of measures taken to relax exchange controls and for taxes on short-term capital flows, according to a report by Reuters on Tuesday from Johannesburg.

The positions laid out in an economic policy paper put pressure on the ruling African National Congress to reconsider its foreign exchange and economic policies when it holds a major strategy setting session next week.

'Due to relaxation of capital controls, (company) profits were repatriated in the form of dividend payments.

'The outflow of funds increased South Africa's dependence on short-term capital flows to finance expenditure,' it said.

COSATU, a powerful vote-gathering machine for the ruling party, has been fighting for increased influence on economic policy, disappointed that the ANC has so far rejected its left-leaning proposals.

COSATU and the ANC held high-level talks on Monday to repair rifts in the alliance brought about by a three-week strike by state workers and what the labour group sees as growing cronyism in President Jacob Zuma's government.

The ANC has maintained investor-friendly policies in Africa's biggest economy but rising unemployment and entrenched poverty, along with COSATU's influence among the poor, is piling pressure on the party to show its policies are worth pursuing.