Kganyago outlines policy shifts driving emerging market resilience

During the crises of the 1990s, emerging economies suffered from weak monetary credibility, pegged exchange rates, and foreign currency debt.

Kganyago explained that a fundamental paradigm shift occurred when central banks gained independence, adopted inflation targeting, and allowed currencies to float.

Additionally, major emerging markets built extensive foreign exchange reserves to protect national balance sheets against sudden capital flight.

South Africa exemplifies this transformation: foreign reserves expanded from near zero twenty-five years ago to approximately 74 billion dollars today.

Coupled with enhanced prudential supervision, these structural reforms successfully decoupled core emerging markets from past systemic bailouts.

Despite monetary stability, fiscal policy remains a persistent vulnerability across emerging and advanced economies.

South Africa experienced a sharp debt expansion from under 30 percent of GDP to nearly 80 percent following the 2008 financial crisis, driving borrowing costs higher.

While recent fiscal prudence has produced a primary budget surplus, economic growth remains severely constrained.

Kganyago stressed that growth stagnation stems from institutional damage caused by state capture rather than macroeconomic policy frameworks.