Reserve Bank aims to do right thing

SA’s bad economic performance is unlikely to give more sway to populist voices and will rather empower reformers in the government to pursue the right policies, Reserve Bank governor

Lesetja Kganyago said. “We cannot stop some people from saying populist things, but we can win the policy debates – and we are winning,” Kganyago told an investor conference on Thursday in New York, in his second reference to populism this week. “Bad economic outcomes, in this case, seem to be supporting better policies.”

Kganyago said on October 30 that the nation spent too much time debating populist issues, such as the proposed nationalisation of the central bank, instead of focusing on steps to boost the economy, which fell into a recession in the second quarter. GDP has not expanded more than 2% annually since 2013, complicating the government’s task of trimming a 27% jobless rate and reducing poverty.

The ANC decided in December it would pursue changes to the constitution to make land expropriation without compensation easier and that the SA Reserve Bank should be state-owned, like most other central banks. In August, the EFF, which has won support by vowing to nationalise everything from land to banks, tabled a bill to change the ownership of the Reserve Bank.

“SA has its share of populists who want to do radical things,” Kganyago said. “But it’s increasingly clear that the centre will hold.”

The country aspires to growth rates nearer its historical trend levels, he said.

“We are recovering from a period of self-inflicted injuries, and there are good growth opportunities that we can exploit when we have recovered our health,” Kganyago said. “Our politics have taken a reformist turn, which should permit a constructive response, rather than a destructive reaction, to the disappointments of the recent past. I am confident that SA tomorrow will be better than SA today.”