SA supports commitments to economic recovery

Sunday, September 6, 2009

Pretoria - South Africa has expressed its support for the commitments made at the G20 meeting of Finance Ministers and Central Bank Governors in London at the weekend.

Among these commitments is the decision to promptly implement the April 2008 quota reform package, improve the quota share of emerging countries in both the International Monetary Fund and the World Bank, reform their Executive Boards, and increase the size of World Board by one member to allow an additional African Chair.

"South Africa also supports the expansion of credit facilities including the introduction of the Flexible Credit Line and a more flexible range of instruments for low-income countries," said the National Treasury.

However, it added that turning broad commitments for governance reform into action remained a challenge.

"On reforms to the financial regulatory system, South Africa supports the initiatives of the Financial Stability Board to improve the architecture of the financial regulatory system, and mechanisms to improve collaboration and co-ordination between countries."

The country in particular supports the initiatives to regulate bankers pay and bonuses in order to reduce and minimise excessive and reckless risk-taking culture that has infected many banks.

South African regulators have been effective in regulating such risk in our banking system, said the National Treasury, and this remains an example to the rest of the world.

It further said that the world economy had a way to go toward complete recovery and it was still concerned about the impact of the financial crisis on low income countries, particularly those in Africa.

"The G20 has reaffirmed that collective and coordinated efforts will be needed globally to ensure sustainable growth, and to build a stronger and more effective international financial system," it said.

Finance Minister Pravin Gordhan and Deputy Governor of the Reserve Bank, Dr Renosi Mokate, attended the G20 meeting on Friday and Saturday.

The meeting noted that there were tentative signs of recovery in the global economy, although it was uneven across countries and regions.

"The outlook remains cautious and it is too early to conclude that the recovery has gained traction. In light of this, the G20 countries committed to maintaining their current fiscal and monetary policy stimulus policies," said the National Treasury.

The meeting reviewed the latest data on the state of the world economy and concluded that stimulus packages should remain in place until recovery is secured.

The meetings of the G20 in November last year, and April this year, lead to a reshaping of the architecture and rules governing the global financial system.

While the weekend's meeting reiterated the need for swift and full implementation of the commitments made at the Washington and London Summits, countries agreed on steps to be taken to strengthen the financial system, coordinated by the Financial Stability Board.

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