Printing money would lead to deeper recession – Kganyago

Reserve Bank governor Lesetja Kganyago says that South Africa faces a protracted economic recession if the central bank is forced to abandon its policy of reducing inflation and protecting the currency.

In an editorial piece in the Sunday Times, Kganyago warned that a call by Public Protector, Busi Mkhwebane, for the bank to focus on growth, ignored the perils of high consumer prices, Reuters said.

“The past half-century is littered with examples of painful recessions caused by the need to reduce runaway inflation created by authorities trying to create growth by printing money,” Kganyago said.

Mkhwebane recently released a report on the apartheid-era looting of the state by Bankorp – the financial institution that would later be incorporated into Absa.

In her findings, Mkhwebane found that the Reserve Bank and the government failed to recover R1.125 billion from Bankorp for irregular monetary gifts granted to it during apartheid.

As part of her ruling, in an apparent bid to “prevent the same thing from happening again”, Mkhwebane recommended that Parliament move to change the Reserve Bank’s principal constitutional mandate of maintaining currency and price stability to focus on economic growth.


“Monetary policy is always about supporting economic growth in a sustainable way. Experience shows economies grow stronger and more consistently at lower inflation rates,” Kganyago said.

Read: Why understanding inflation is so important – Kganyago


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Printing money would lead to deeper recession – Kganyago