would like to talk about how we might navigate them. given my brief, i am going to focus on south africa ’ s experience and outlook, although i think that this framework is useful for thinking through the broader emerging market challenges. macroeconomic rebalancing since the 2013 ‘ taper tantrum ’, south africa has undergone a substantial macroeconomic adjustment. in particular, the current account has narrowed from nearly 6 % of gross domestic product ( gdp ) in 2013 to 2. 4 % last year. this change came largely from the trade account, which has registered surpluses in 8 of the past 10 quarters. our services account has followed a similar trend, and is now roughly balanced. page 3 of 8 by contrast, our income and current transfers account has remained in deficit. this is in part because of transfers to our neighbours in the southern african customs union, amounting to roughly 1 % of gdp annually. the balance reflects income payments, driven by high yield differentials on our foreign liabilities when compared with our foreign assets. a growing stock of sovereign debt held by foreigners has been an especially important contributor to these income payments. the overall income deficit stands at about 3 % of gdp, of which close to 1. 5 percentage points is coming from interest payments on sovereign debt. the fiscal balance has changed less than the current account deficit, at least at a headline level. the latest medium term budget policy statement indicates a fiscal deficit of 4 % of gdp for the 2017 / 18 financial year. this is better than the 2012 / 13 figure of 5 %, but it is still large – both in absolute terms and relative to previous projections. the change in the primary balance has been more dramatic, narrowing from 2. 3 % of gdp in 2013 to 1 % in the latest financial year. but this number is still negative, so the debt stock is not yet stabilising. as a central bank governor, i try not to say too much about fiscal policy – not least because i would like to reciprocate the courtesy that other authorities show us by respecting the independence of monetary policy. let me therefore just reiterate three crucial points made by our minister of finance, mr tito mboweni, in his recent address to parliament. 2 to quote directly : we must choose a path that stabilises and reduces the national debt. we cannot continue to borrow at this rate. we must choose to reduce the structural deficit, especially the consistently high growth in the real public - sector wage

in place until we consider the covid - 19 crisis phase to be over. let me next turn to the ecb monetary policy strategy review. after being postponed due to the crisis, the review was re - launched last month, and it is expected to be completed by september next year. the essential underlying reason for the strategy review is the profound structural changes in the euro area and in the global economy. these include, in particular, the change in the relationship between the spare capacity of the economy and inflation, as well as the long - term decline in the natural interest rate and the sluggish productivity growth. the lower natural interest rate has reduced the room for interest rate cuts, as the effective lower bound lays the floor for them. however, non - standard policy measures have alleviated this constraint to some extent. a reassessment of the ecb ’ s monetary policy strategy is all the more necessary given both the long - term low inflation – or ‘ lowflation ’ – and the damage wrought by the covid - 19 pandemic. 1 the strategy review will cover a wide range of subjects, including climate change and digitalization, and it is supported by in - depth analyses of the forces that drive inflation dynamics today – or rather, slow them down. one of the key issues of the review and of monetary policy 1 / 2 bis central bankers'speeches today is inflation expectations, and how they should or could be correctly anchored. in the early years of its operation, the ecb was seeking to establish credibility in an operating environment in which too high inflation was the main concern. this led to the ecb successfully capping inflation expectations by aiming for inflation of “ below, but close to, 2 % ”. however, in the current environment of chronically low inflation, it is more important to ensure that inflation expectations are not anchored at too low levels. today, that is regretfully the case, which has been amplified by the perceived ceiling and asymmetry in the price stability definition, as demonstrated in a recent paper by bank of finland researchers. 2 to underpin inflation expectations, the first thing to do is to make sure that our inflation target is defined as symmetric – and in particular that the public understands it as symmetric. my way of thinking is thus largely similar to that expressed by president lagarde in her recent speech. 3 in other words, what we need is, first of all, a clearly and genuinely symmetric price stability target, and secondly,