IMF: Inflation-targeting the right policy for SA

Inflation-targeting is the right policy for South Africa, the International Monetary Fund (IMF) said on Wednesday.

IMF managing director Dominique Straus-Kahn said the policy, however, had to be used “flexibly”.

“The South African economy has weathered the immediate effects of the global crisis, mainly due to sound macroeconomic policies, its flexible monetary and exchange rate regime, and a well supervised financial system,” he told media in Johannesburg, following his two-day visit to South Africa.

He said during his visit he had had productive discussions with the authorities on the country’s economic outlook and challenges.

Fiscal policy had been appropriately counter-cyclical, striking the proper balance between supporting output and preserving medium-term sustainability, he said.

Straus-Kahn said, however, South Africa continued to face difficulties as unemployment was extremely high.

South Africa’s success had important implications for the rest of Africa.

“As a member of the G20, it has a leadership role to play in advancing prosperity across the continent and making the voice of Africa heard in the international arena.”

Straus-Kahn was on an African tour that began in Kenya. His next stop is Zambia.—Sapa