Lesetja Kganyago warns of high cost of risky, inflation-boosting economic policies
Reserve Bank governor says inequality, poverty and unemployment are not reasons to gamble on stability
SA cannot take huge risks that drive up inflation and the country’s borrowing costs in order to boost growth and job creation, warns Reserve Bank governor Lesetja Kganyago. “People ask, ‘wouldn’t it be worth taking big risks, having more inflation, borrowing as much as we can get away with, if only we could get some growth and some jobs?’ They even say, ‘in a highly unequal country like SA, wouldn’t it be politically safer to take macroeconomic risks to try and get poverty and unemployment lower?’ But this is wrong,” he said at an Association of Black Securities and Investment Professionals conference in Johannesburg on Friday. SA has implemented a policy of fiscal transparency that has prompted a clear message from analysts, investors, the ratings agencies, international organisations and others “that SA needs to maintain budget responsibility and get state-owned enterprise risks under control”, which is a priority government has reiterated, he said.
This comes before the med...