conclude that the political commitment to fiscal discipline should have been much more pronounced during the last few years when the global economy enjoyed broadly robust growth. as the world is entering what looks like a protracted period of lower growth, it will be extremely difficult to keep public debtto - gdp ratios constant, let alone reduce them. 5. conclusion after this very brief fiscal detour let me conclude by returning to albert gallatin. anyone who loves the city of geneva has many reasons to be proud of the achievements of albert gallatin. to my knowledge, he is the only son or daughter of geneva who is honored in the form of a prominent statue in washington d. c. he stands at the entrance of the treasury building, and only a few steps away from the white house. on the statue, he is described simply as a “ genius of finance ”. as secretary of the united states treasury, he made a crucial contribution to the stability and development of the nascent united states financial system. above all, he was deeply committed to reducing the size of the federal public debt during his first seven years in office. only when tax revenues declined, as the threat of war loomed, did he allow debt reduction to be relegated to a secondary objective. see paul r. masson and michael l. mussa, long - term tendencies in budget deficits and debt imf working paper no. 95 / 128, 1995. in spite of the cold war, proxy wars and several wars of independence of colonies, the period after the second world war remains one of relative peace in the developed world, compared with any other period in history. most of the sub - periods during which debt grew fastest have coincided with periods of economic slowdown. but what is remarkable is that we have not generally seen a reduction in debt levels in good times that would match the increases in debt in downturns. what the graph hides is the fact that most of the increase in the average oecd public debt - to - gdp ratio in the late 1990s has been driven by the steep debt increases of japan in the 1990s. taking out japan from the sample shows a slight drop in the average debt ratio during this period. gallatin ’ s debt reduction efforts look even more remarkable when viewed through the prism of current fiscal developments throughout the developed world. if albert gallatin had been in charge of oecd public finances during the decade prior to the onset of the current financial turmoil, we might be in a more comfortable fiscal situation today

debt risks highlights the importance of fiscal sustainability. markets have become increasingly sensitive towards sovereign risks and therefore policymakers need to recognise the urgency of reducing excessive public debt. fortunately, in this regard south africa is on a solid footing when compared to challenges faced elsewhere. south african financial markets are an integral part of global markets and will continue to be subjected to global developments. as one of my colleagues recently said : “ the best defence is to stick to sensible policies ”. but we must now turn our focus to successfully hosting the 2010 fifa soccer world cup starting in about a week ’ s time, for the first time ever on the african continent. south africa has again shown its mettle, and has overcome all scepticism, and we are now ready to welcome the world! in closing, i would like to convey my appreciation to the management and staff of the financial markets department, not only for paying the bill tonight, but for the sterling work that they do for the bank and our markets. thank you also to the staff of the sarb conference centre for taking care of us tonight. thank you and enjoy the evening.