with policy choices, with capital flows supporting or weakening the productive potential of an economy. at the end of the 1980s, australia had a fiscal surplus of 1 % of gdp and a current account deficit of 6 % of gdp. the classic comparison is argentina and australia ; see for instance alexis esposto and fernando tohme, drifting apart : the divergent development paths of argentina and australia. germany : vdm verlag : saarbrucken, 2009. on the whole, the australian case teaches us that a country can absorb large capital flows over very long periods of time, and use these to support high levels of prosperity. this contrasts starkly with the asian examples, where a range of countries likewise achieved impressive gains in living standards, but mostly did so without foreign capital. most of the world ’ s countries would be happy if they could be asian tigers, and ecstatic if they could be australia. but many of us have a long way to go. what attitude to capital flows would help us on our way? in south africa, we have long favoured the australian option. 15 given ample investment opportunities and limited domestic savings, growth and capital inflows have typically been correlated. in 1985, when the apartheid government was hit with sanctions, access to capital flows was largely cut off. 16 of course, this was not a developmental policy for south africa ; it was a punishment. when sanctions were lifted at the end of apartheid, we looked forward to restoring access to global financial markets. we also appreciated that the end of sanctions did not mean the taps were open. foreign investors all loved south africa, but they would not invest based on warm feelings. and there was going to be a limit on how much investment we could attract, even with good policies. with a low domestic savings rate, if the public and private sectors were both borrowing heavily, this meant we were going to hit a balance of payments constraint. specifically, we anticipated an unsustainable current account deficit, which would weaken the rand and drive up inflation. interest rates would then have to rise to rebalance savings and investment, slowing growth. this was the core problem statement of the macroeconomic strategy adopted by the mandela government in 1996. the goal was to attract more foreign savings, apply some fiscal discipline to improve the country ’ s south african balance of payments data are available from 1960. the average current account balance for 1960 - 2021 is - 1. 05 % of gdp. the broad pattern, however, is for substantial

recently, in india, a development platform with the promise to reverse several years of sub - par growth and high inflation is being pursued. the lesson to take from this is that we are not helpless in the face of economic disappointment, of high inflation and low growth. for monetary policymakers, with limited tools, this situation provides no attractive choices. but there are many appealing options available for other aspects of policy. for south africa, our present predicament should be read as an invitation to embrace reform. the national development plan provides a compelling basis upon which to build our reform agenda. let us begin to do the work. the contribution of the south african reserve bank to the national development plan is captured in the constitution of the republic of sa and i would like to end by quoting “ section 224. the primary object of the south african reserve bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the republic. ” thank you. bis central bankers ’ speeches