News out of SA bodes well as Davos World Economic Forum looms

GOOD news was a dominant feature this week.

Deputy President Cyril Ramaphosa, who will lead Team SA to the World Economic Forum (Wef) in Davos next week, spoke tough against state capture and corruption; the interest rate remained unchanged and Reserve Bank governor Lesetja Kganyago was selected as chairman of the International Monetary Fund and Financial Committee (IMFC).

Speaking at the Team SA Wef breakfast planning session in Johannesburg on Thursday, he called on the National Prosecuting Authority (NPA) to move with speed in bringing those implicated in wrongdoing to book.

The NPA has already met lawyers from companies McKinsey and Trillian, which have been served with preservation orders in an effort by the state to recoup R1.6 billion paid to them illegally via Eskom, and this could result in an out-of-court settlement.

The NPA’s Asset Forfeiture Unit is on a quest to recoup R50bn that was looted from the state in what became known as state capture. President Jacob Zuma’s controversial friends, the Guptas, are central figures linked to this phenomenon.

Ramaphosa said Eskom had been one of the biggest parastatals that have been plagued by financial and leadership instability and corruption allegations linked to the Guptas.

“We welcome the actions that they are beginning to take and want them to act with urgency to increase the tempo of the actions that need to be taken.

“The freezing of assets is an important component of this, but we want to see a lot more,” he said.

On Thursday, Kganyago announced the interest rate remained at 6.75% owing to a stronger exchange rate, among other factors, that resulted in an improved inflation and economic growth outlook.

Inflation was expected to drop to below the midpoint of the target range of 3 to 6%, he said, noting however, that inflation was expected to rise and hit 5.5% in the final quarter of next year.

In other news, the International Monetary Fund (IMF) announced that Kganyago has been selected as chairman of the IMFC for a three-year term, effective January 18.

He succeeds former governor of the Banco de México, Agustín Carstens, who resigned his chairmanship on December 1 to assume the position of general manager of the Bank for International Settlements, the IMF said.

“He served as deputy governor of the SA Reserve Bank from May 2011 and was responsible for a wide range of areas, including research, financial stability and regulatory reform, bank supervision and risk management and com- pliance. During his tenure as director- general of the National Treasury of South Africa, he successfully steered a number of public finance and financial markets reforms,” the IMF said.

“Mr Kganyago led South Africa’s technical team to various meetings of G20 finance ministers and central bank governors, including during South Africa’s presidency in 2007. Mr Kganyago also chaired the IMF/World Bank Development Committee Deputies and the G20 Working Group on IMF Governance Reform.

“Mr Kganyago is currently the chair of the Association of African Central Bankers, the chair of the Committee of Central Bank Governors of the Southern African Development Community and the co-chair of the Financial Stability Board’s Regional Consultative Group for Sub-Saharan Africa.”

Kganyago is also the chair of the Financial Stability Board’s Standing Committee on Standards Implementation. The IMFC is the primary advisory body of the IMF Board of Governors.

It deliberates on the principal policy issues facing the IMF and has 24 members.