Kganyago can benefit SA

Anyone who happened to be watching TV on Saturday night might have come upon a broadcast from Washington in which the chairman of the IMF’s international monetary and finance committee, Lesetja Kganyago, reported back on the committee’s deliberations, alongside IMF CEO Christine Lagarde.

The sometimes arcane politics of the Bretton Woods institutions — the IMF and World Bank — don’t tend to be of much interest in SA. But having our own man speaking for a committee that is the IMF’s top policy adviser does inspire pride and it potentially has real impact.

Much of Saturday’s Washington media conference focused on the committee’s concern about the rise of protectionism and Kganyago, a seasoned economist, took the lead in detailing just how important the expansion of global trade has been in driving the global economic recovery of the past couple of years, and why it needs to continue.

But he also brings to the post an emerging markets perspective and SA and its emerging market peers, particularly in smaller markets such as our own, stand to benefit if that perspective is more centre stage in Washington.

One “emerging” market that certainly doesn’t lack for focus is China, and the big concern about protectionism at the IMF’s spring meetings that ended on Saturday was about the prospect of the trade war between the US and China that could follow President Donald Trump’s new trade barriers.

Tension between these two economies, which are the world’s largest, overshadowed the meetings in Washington, but happily, it seems the meetings did provide a platform to moderate that tension. Lagarde has been vocal in calling for countries to avoid damaging protectionism and not long after she said the spring meeting “had made progress towards dialogue” US treasury secretary Steven Mnuchin announced he was considering a trip to Beijing to hold talks on the trade dispute, and China welcomed this.

Ten years after the global financial crisis, the Bretton Woods institutions are making progress on the institutional reforms that emerging markets, China included, have long called for. China’s share of the vote will increase somewhat, and that of the US will decrease, in terms of reforms announced at the weekend, which will also see the Bretton Woods member countries put more capital into the World Bank to enable it to expand its developmental role.

The meeting flagged the risk of the high level of debt held by governments and nonfinancial institutions, and the African Consultive Group meeting in Washington sounded warning noises about growth being too low and public debt levels rising to unmanageable levels in many countries on the continent.

The risks to the global financial system posed by the rise of cryptocurrencies was also a key discussion, with policy makers looking at what they can do to mitigate and manage those risks.

But the meeting took up various other hot global topics as well, moving to review the role that advanced countries play in bribery and corruption globally and to step up monitoring corruption in the countries to which the IMF lends.

The acknowledgement that corruption is not just an emerging market scourge but an advanced country one is significant: as Lagarde said, “the flip side of every bribe taken is a bribe given”, and much of the money flows go through the financial sectors of major capitals.

With global recovery now well under way and the IMF raising its forecast for global growth in 2018 and 2019 the tone of the meeting was fairly optimistic, and the IMF is trying to nurture that growth and demonstrate its own relevance across a broad front of issues.

SA has a seat at that table, now it just has to take advantage of that global growth to up its own economic growth rate.

HAVING OUR OWN MAN SPEAKING FOR A COMMITTEE THAT IS THE IMF’S POLICY ADVISER DOES INSPIRE PRIDE