Editor's note: In November this year, the term of current Reserve Bank governor Lesetja Kganyago comes to an end. Lumkile Mondi, a lecturer at the University of the Witwatersrand, says that Cyril Ramaphosa should appoint Kganyago to a second term.
"In 1996, the Government of National Unity adopted the Growth, Employment and Redistribution: A Macroeconomic Strategy for SA framework. Its focus was on fiscal consolidation, which would occur by cutting expenditure and thereby reducing the budget deficit to a targeted 3% level as a percentage of GDP.
"It was during this period that Lesetja Kganyago, led by Maria Ramos, who was National Treasury director-general, and Trevor Manuel, who was finance minister, fine-tuned his skills of negotiating with domestic and international financial institutions to sell South African debt to finance the budget deficit."
"Kganyago had been enticed to the Treasury after spending time at the SA Reserve Bank’s treasury, thereby joining a formidable team that would move South Africa from “junk” status to achieve an investment-grade rating from the three top ratings agencies. He played a critical role in modernising the Treasury, including the introduction of an inflation-linked bond and the outsourcing of primary dealers to the private sector, which made a market of government stock.
"He also coordinated with the Eskom and Transnet treasury departments, which eventually underpinned the Bond Exchange of SA that is now part of the JSE Securities Exchange.
"When Ramos completed her term at Treasury in 2005, Kganyago was promoted to the position of director-general.
"As though he expected a market correction and economic crisis, Kganyago was the architect of the budget surplus. A budget surplus ensures that government is resilient during periods of financial crisis and can support its economic programmes without rushing to the markets to borrow."
Read the rest at News24.
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