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SA spends too much time on populism, Kganyago says

Instead of focusing on boosting the economy.

South Africa spends too much time debating populist issues such as the proposed nationalisation of the central bank, instead of focusing on steps to boost the economy, Reserve Bank Governor Lesetja Kganyago said.

“We have spent too much of the year indulging in populism instead of making pragmatic choices,” Kganyago said in in the foreword to the central bank’s Monetary Policy Review released Monday in the capital, Pretoria. “A particular concern for me has been the amount of time we have squandered discussing Reserve Bank nationalisation.”

The ruling African National Congress decided in December that the Reserve Bank should be state-owned, like most other central banks. In August, the radical Economic Freedom Fighters political party, which has won support by vowing to nationalize everything from land to banks, tabled a bill to change the ownership.

“No one can explain what South Africa will gain from this step, or why it would justify the potential costs,” Kganyago said. “Clearly this subject excites some passion, so we keep talking about it, but it is the wrong priority. If we are serious about South Africa’s economic performance, we need to be more focused in our agenda-setting.”

Africa’s most-industrialised economy hasn’t expanded at more than 2 percent annually since 2013 and fell into a recession in the second quarter. Without the appropriate reforms, growth is likely to stay muted, according to the Monetary Policy Review.

President Cyril Ramaphosa announced a stimulus plan to boost growth and pledged to attract $100 billion to the economy in the next five years. Since announcing the investment drive in April, China, the UK, the UAE, Saudi Arabia and Daimler AG’s Mercedes-Benz unit have pledged $35.5 billion. At an investment summit last week companies promised almost $20 billion.

“If the amount can be delivered, it will actually have a massive impact,” Kganyago said at a forum after the release of the policy review. “Is this amount achievable? I do not know, but there is nothing wrong with being ambitious.”

While the large budget deficit could help boost domestic demand, tax increases that were announced in February may have the opposite effect, the central bank said.

“Given this mix of stimulatory and contradictory elements, fiscal policy is perhaps best described as having one foot on the brake and the other on the accelerator,” it said.

© 2018 Bloomberg L.P

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Refreshing to hear our Reserve Bank Governor speaking of the need to make sensible economic decisions . If only the populist politicians in Parliament could take heed of his message couched in simple language , no doubt so that those economically illiterates , can realize that with one foot on the petrol and one on the brake , the car actually ends up standing still .

As the Reserve Bank Governor says, “there is nothing wrong with being ambitious” when it comes to adding up the proposed value of the pledges. However, history proves that we will not get most of the pledged money, if any of it at all. It is all a lot of hot wind being blown to that the emphasis off of the poor performance of the government and the looting of the funds from the fiscus. Reserve Bank Governor Lesetja Kganyago has wise words. He is one of the few people in the top leadership of the ANC that makes sensible and positive statements.

It is not SA who is wasting time about populism. It is the corrupt ANC and EFF politicians and their brainless supporters in order to get votes to stay in power to steal more.

And this is exactly why they want to nationalize the reserve bank. They want to prevent them from speaking sense as it doesn’t further their socialist agenda.

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