##vre in the future. this involves a continued anchoring of inflation expectations around the midpoint of our target range in the coming years and ensuring that financial markets are functional. at present, achieving our goals appears consistent with a relatively low level of interest rates, in the next year or two, compared with the average of earlier cycles. but we must remain vigilant and watch for potential changes in drivers of equilibrium interest rates in the future. see barclays research, op. cit. the international monetary fund is projecting a rise in south africa ’ s gross government debt / gdp ratio from 62. 2 % in 2019 to 85. 6 % in 2021, the largest among major emerging economies. see fiscal monitor, international monetary fund, april 2020.

##ncies have stabilised, even though they remain much weaker than pre - crisis levels. south africa is no exception : the south african rand is currently trading at about r17. 00 / us $, weaker than the january 2020 average of r14. 40 / us $ but much improved from early april lows of r19. 00 / us $. shorter - dated government bond yields are now trading lower than at the start of 2020, though yields on longer - dated bonds are higher, probably reflecting higher credit risk and debt issuance. 4. interest rates are likely to stay low over the next two years the economic shock from covid - 19, however, will probably take longer to subside than its financial counterpart, despite the combination of fiscal and monetary support provided. global activity has rebounded from the lows of april ( when most of the world faced a strict lockdown ), as restrictions on economic activity and people ’ s mobility have been lifted. but activity indicators are still significantly below pre - crisis levels, and as activity gradually converges towards ‘ normal ’ levels, the pace of convergence slows. some commentators argue that the harder part of the economic normalisation begins now. in most countries, private and official institutions, on balance, do not project a return of real gdp to pre - covid - 19 levels until late - 2021 or even late - 2022. negative output gaps are expected to be the norm. with respect to unemployment, the consensus view is that normalisation will take even longer. south africa has been gradually lifting restrictions on economic activity since late april ; both fiscal and monetary policies were eased significantly to help facilitate the economic recovery. on the monetary front, the sarb ’ s mpc lowered the repo rate by a cumulative 275 basis points between march and july ; the bulk of the reduction ( 250 basis points ) occurred between the march and may meetings − a fast response by the standards of large emerging markets. to facilitate the flow of credit to cashconstrained businesses and individuals, the sarb injected liquidity in money markets through larger and more frequent repo operations. it also temporarily relaxed some regulatory capital requirements for banks. finally, the sarb purchased government bonds in the secondary market to ensure liquidity and the smooth functioning of the bond market. nonetheless, the plunge in second - quarter economic activity, when real gdp fell at an annualised rate of 51 %, could not be reversed. base effects, admittedly, will result in spectacular growth