Capital flows can lead to fiscal slippage if mismanaged, says Lesetja Kganyago
Central bank governor outlines tools for risk management as he delivers Michel Camdessus annual lecture
11 July 2023 - 19:31
Reserve Bank governor Lesetja Kganyago warned that while capital flows are good for emerging markets such as SA as they support investment and reduce financing costs, their misuse has permitted the build-up of large sovereign debt positions — a situation he referred to as “particularly problematic” as it often leads to fiscal slippage.
Giving the 2023 Michel Camdessus central banking annual lecture at the IMF in Washington on Tuesday, Kganyago said that when misused, capital flows can increase government debt and erode potential growth...
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