South African Central Bank Head warns against populist policies

South Africa Reserve Bank Governor, Lesetja Kganyago has warned the country to avoid populist economic policies and prioritize strategies that lead to sustainable growth and job creation.

Kganyago said the central problem was avoiding the temptation to pursue economic policies that have short-term, populist benefits but long-term costs.

“The central problem is avoiding the temptation to pursue economic policies that have short-term, populist benefits but long-term costs,” Kganyago wrote in an opinion piece in the Johannesburg-based Business Times. Such decisions result in higher public or private debt to finance consumption, which is contributing to recent market contagion, he said.

Africa’s most industrialized economy entered a recession in the second quarter, with the rand weakening to a two-year low.

According to the Central bank head, the currency’s rapid depreciation reflects a perception that “South Africans are discussing policies that risk undermining the macro framework rather than inducing stronger economic growth and job creation.

He added that another task is to get more out of public spending ridding institutions of corruption and improving health and education outcomes.”