By Lehlohonolo Lehana.
South African Reserve Bank (Sarb) Governor, Lesetja Kganyago says, the second G20 finance ministers and central bank governors meeting reflected on the current economic developments and the extent of the uncertainty that engulfed the financial markets as a result of the trade measures.
Kganyago and Finance Minister Enoch Godongwana were speaking during a media briefing of International Monetary Fund and World Bank Spring Meetings in Washington D.C. on Thursday.
South Africa is chairing the G20 group of nations until November 2025, a complex task that involves coordinating a broad and fractious membership that includes the United States, China, Russia, the European Union and the African Union.
Kganyago said it was too early to know the impact on global disinflation of the trade tensions triggered by U.S. President Donald Trump’s imports tariffs.
“We know … that tariffs are negative for economic growth – it’s a no-win game,” Kganyago said.
“And for many of us who are from small, open economies, the impact on sentiment is such that global financing conditions remain tight or tighter for longer than what we had expected them to be.”
As part of the broad tariffs he announced in early April, Trump slapped a 31% levy on imports from South Africa. Many of the higher U.S. levies on dozens of countries have been put on hold.
Kganyago said the meeting also reflected on the benefits from globalization, and members were supporting an open, rules-based, and transparent trading system with the World Trade Organizations at its core.
He said there was also a big reflection that the current rules might have to be relooked in a bid to have a much fairer trade.
“There was also a reflection on the global imbalances, and that was strongly emphasized, and that we need to look at the root causes and review both the internal and global policies that intensify these imbalances and increased trade barriers and trade tensions that we had seen, and that the IMF should actually be playing a key role in assessing the country-specific policies,”he said.
Godongwana said the meeting opened with discussing the international financial architecture, which focuses, among other things, on the continued agenda of the reform of the multinational banks.
He said the key item was that work has been done, but what the G20 needed to do was to develop a reporting mechanism for the banks, which it hoped to be concluded by the end of September.
“The issues also continue to deal with the debt vulnerabilities, particularly in emerging economies and the African continent. In this regard, the common framework is an instrument. We will be publishing case studies of countries that have gone through that process,” Godongwana said.
“On the focus, another focus agenda was on the African continent. As you would be aware, given the fact that the presidency [of the G20] now is on the African continent, we’ve given a spin and a focus on Africa.
Then a key of those challenges that need to be done on the African continent, and deepening some of the institutional arrangements we’ve had, like the combat with Africa, replenishing the African Fund, African Development Fund, and generally, how do we deal with the cost of capital and access to capital for the African continent. Those are some of the challenges that we grappled with this morning.”
Watch Live in the video below:
Video Courtesy of SARB.