Kganyago: No policy room for Sarb to do more during COVID-19 crisis
SA Reserve Bank Governor Lesetja Kganyago said that wasted policy space since the 2008 global recession meant that there was little room for any more interventions from the bank.
JOHANNESBURG - Reserve Bank Governor Lesetja Kganyago said that South Africa failed to create economic buffers needed now during the COVID-19 crisis after the 2008 global recession.
While the bank’s fiscal response amounted to R180 billion following the recession, Kganyago said that the conditions currently did not allow for an intervention of that magnitude.
With the debate over what action the South Africa Reserve Bank (Sarb) can take to aid the economy as the impact of COVID-19 deepens, Kganyago said that there was simply no policy room for more to be done.
In March, the bank said that it would embark on a programme to purchase an unspecified amount of government securities in the secondary market to add liquidity to the market.
Kganyago said that wasted policy space since 2008 meant that there was little room for any more interventions from the bank.
He further explained that even the effectiveness of the bank’s actions were currently unknown.
Wider sections of the economy were only reopened this month during level three of the national lockdown after they were forced to shut down for over two months.
For official information about COVID-19 from the Department of Health, please click here.