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Reserve Bank Governer: Our task is not to bail out Eskom or any SOEs

13 December 2019 8:37 AM
Tags:
Reserve Bank Governor Lesetja Kganyago
Sarb
Sarb Governor Lesetja Kganyago highlights responsibilities of Reserve Bank and why interest rates are a tool not policy objective.

South African Reserve Bank Governor Lesetja Kganyago talks to Refilwe Moloto about the key issues pertaining to the economy and the importance of distinguishing between the roles of monetary and fiscal policy.

Kganyago says it is a straightforward mandate.

The Constitution tasks the Reserve Bank with a responsibility for price stability and it tasks the National Treasury with responsibility for public finances. Put together that is macroeconomic policy.

Lesetja Kganyago, Governor - South African Reserve Bank

Those together set the macroeconomic policy and stance of the country, he explains.

Cutting interest, therefore, cannot be used to solve the country's economic woes, either in SOEs or the economy at large.

What is happening at Eskom and other state-owned enterprises is the responsibility of government, and the responsibility of the ministry of public enterprises and of the National Treasury.

Lesetja Kganyago, Governor - South African Reserve Bank

Sarb has been tasked with a specific responsibility, he reiterates.

We do not allocate money...those bailouts need to come from government, and not the monetary authority.

Lesetja Kganyago, Governor - South African Reserve Bank

Interest rates are used to maintain price stability he insists.

Interest rates are a tool and not a policy objective. And the problem we have had with the narrative now, where people are looking at interest rates as if they are a policy goal.

Lesetja Kganyago, Governor - South African Reserve Bank

The future predicts a challenging environment for reserve banks globally because the global economy is not in the best shape over the past five years.

There was talk of a synchronised economic recovery and now there is talk about a synchronised slow-down.

South African Reserve Bank Governor Lesetja Kganyago

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13 December 2019 8:37 AM
Tags:
Reserve Bank Governor Lesetja Kganyago
Sarb

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