personal income tax deducted by the employer. others, such as employment insurance payments and social assistance payments, work with a fairly short lag. these types of fiscal stabilizers are very effective in dampening an output cycle. but they do not come close to fully offsetting the change in output. other elements of the automatic fiscal stabilizers do not take hold until income tax is settled in the spring of each year. the lags in the effects of monetary policy mean that there is no contemporaneous dampening effect on output. while changes in monetary policy can have some impact in the very short run, the full impact on output is not normally felt for 12 to 18 months. it is largely because of these lags that the bank aims to bring inflation back on target over an 18 - to 24 - month horizon. as i noted earlier, the automatic fiscal stabilizers at the federal level will no longer have to be offset. what difference does that make for monetary policy? the most important factor is that fiscal policy will be more symmetric and predictable. discretionary stabilization policy while the automatic stabilization provided by monetary and fiscal policies is very desirable, the question remains whether there is a role for something further — a role for a discretionary stabilization policy. in the case of monetary policy, the nature of our response is the more or less automatic one described earlier. as i said earlier, judgment is key to the process. that is particularly true at times of great uncertainty, as existed last autumn. but our clear inflation target means that, in principle, our discretion is limited relative to that of fiscal policy. the arguments for and against discretionary fiscal policy as an important element in macroeconomic stabilization in an open economy tend to revolve primarily around lags, and around the effectiveness of short - run fiscal policy relative to monetary policy. if the timing was close to perfect, fiscal policy measures that lasted for two or three quarters could, in principle, and under ideal circumstances, shorten the time to move output back to its desired level. thus, in principle, discretionary fiscal policy is an important tool. but, as a practitioner, i can tell you that the great problem here is that temporary measures are both difficult to start quickly when the need arises and extraordinarily difficult to stop once the need is past. thus, as a practical matter, not a philosophical one, there are some severe limitations to the use of discretionary fiscal policy as a stabilizer. policy co - operation

an address by lesetja kganyago, governor of the south african reserve bank, at the launch of the sa25 commemorative circulation and collectable coins constitution hill, johannesburg 5 june 2019 honourable ministers, justices of the constitutional court esteemed guests, fellow south africans. it is both a pleasure and a privilege to be here at constitution hill on this very special day. it is indeed an honour for me to be addressing you from the constitutional court, a deeply symbolic and significant place in our constitutional democracy. the constitution, which this court zealously guards, has been a moral compass guiding all of us on this journey we embarked on 25 years ago. it is only fitting that we are gathered here today to commemorate our robust and youthful democracy. i am reminded of a quote by former president thabo mbeki at the opening of the court, who then said : “ the court represents the conversion of the negative, hateful energy of colonialism, subjugation and oppression into a positive, hopeful energy for the present and the future ; a celebration of the creative potential of our people that has given us an architectural jewel. ” page 1 of 4 i should say that, if time permits, please do take a walk around constitution hill. it serves not only as a sobering reminder of a dark past, but also as an awe - inducing monument of the great things that can happen if people come together. the constitution has an important place in the work of the south african reserve bank ( sarb ). one of the principles on which the constitution is based says : “ the independence and impartiality of a public service commission, a reserve bank, an auditor - general and a public protector shall be provided for and safeguarded by the constitution in the interests of the maintenance of effective public finance and administration and a high standard of professional ethics in the public service. ” the constitution also outlines the primary mandate of the sarb : protecting the value of the currency in the interest of balanced and sustainable growth. it is tradition for the sarb to issue commemorative circulation coins to mark both key moments in our history as well as the individuals who helped to shape it. this past year, as the sarb leadership was considering the most significant way to mark 25 years of democracy, we were left with only one answer : the constitution. the enhancement in basic human rights – the rights to housing, health care, basic services such as water and electricity, the rights of workers, the rights of civil organisations,