Reserve Bank governor Lesetja Kganyago. Picture: GALLO IMAGES/BUSINESS DAY/FREDDY MAVUNDA
Reserve Bank governor Lesetja Kganyago. Picture: GALLO IMAGES/BUSINESS DAY/FREDDY MAVUNDA

SA Reserve Bank governor Lesetja Kganyago says the country is in a strong position to deal with global monetary policy tightening and the gradual pullback by policymakers from the stimulus measures enacted amid the Covid-19 pandemic.

When developed countries start to normalise interest rates, SA will be “going into normalisation from a very solid basis”, Kganyago told an investment conference on Thursday.

“The economy is less vulnerable than it was last year — we have got a current-account surplus and the budget balance has recovered faster than we had actually expected,” he said. “That should help the Treasury stabilise debt.”

SA posted its first current-account surplus in almost two decades in 2020 as import demand was suppressed by the economy’s contraction and the value of gold exports rose due to higher prices for the commodity. The Reserve Bank forecasts the current-account surplus to average about 1.3% of GDP in 2021, Kganyago said.

And the country’s main budget deficit for the 2020/2021 fiscal year is smaller than the government’s previous projection after spending undershot estimates while revenue surprised on the upside. The nation recorded a shortfall of R551.9bn, or 11.2% of GDP, on its main budget for the year to the end of March compared with the estimate of 12.3% that finance minister Tito Mboweni presented on February 24.

The improvement in the current-account and budget balances places the country in a better position to deal with the repricing of financial assets globally and a realignment of exchange rates that will be brought about by the normalisation, Kganyago said.

Should the realignment of exchange rates feed through into domestic inflation, the central bank will be ready to act, he said.

Bloomberg. More stories like this are available on


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