November 18, 2019

What is the role of SARB during this economic crisis?

Should the SARB be proactive and intervene in our current economic crisis to promote transformation or should it remain defensive, leaving investment, growth and development to government? Ben Turok, director of the Institute for African Alternatives (IFAA), warns that this debate will not go away and is a discussion that South Africans need to tackle head-on.

IFAA does that in the latest issue of its flagship journal, New Agenda: South African Journal of Social and Economic Policy, which is edited by Professor Turok.

Guest writer Kuben Naidoo, Deputy Governor of the South African Reserve Bank, writes the Reserve Bank’s role is stabilise the macro economy to allow for growth and investment. Expecting SARB to drive transformation, and blaming the central bank for lack of social development, he says, is like blaming the goalkeeper when the team fails to score goals.

Leading economist and the Director of the Centre for Economic Development & Transformation, Duma Gqubule, takes a counter view. He says SARB has focused on inflation targeting instead of actively addressing South Africa’s economic crisis and that it should intervene to stimulate the economy, working closely with Treasury to deliberately create growth.

Blaming SARS for lack of social development is like blaming the goalkeeper when the team fails to score goals.

“South Africa must have this discussion on whether the Reserve Bank should do more to stimulate the economy by actively intervening to promote development, for example by funding critical projects, or whether it should maintain its current defensive position leaving monetary policy to provide a reasonably stable environment in which government can develop policy to drive growth,” says Professor Turok.

He warns South Africa cannot afford to neglect the highly sensitive issue of the role of the SARB, especially at the present time when rating agencies are on the lookout for shifts in government policy, especially concerning inflation targeting.

“We have to move away from the political sniping and public posturing and ask ourselves whether the SARB should do more, and play an interventionist role in the face of poor economic performance. This debate is not going to go away,” Turok writes in the editorial for New Agenda.

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  • Author: Moira Levy
Last modified on Tuesday, 15 October 2019 11:49

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