per cent to 108, 2 per cent ; that of greece from 107, 4 per cent to 165, 3 per cent and the italian ratio increased from 103, 1 per cent to 120, 1 per cent. these data illustrate three important points : first, that sovereign debt crises in some countries did not originate in the public sector ; that debt ratios can accelerate very quickly from seemingly benign and sustainable levels ; and that any given level of debt may be seen to be sustainable, but if the bond markets change their view on this, spreads rise to the extent that the costs of servicing these deficits can rapidly turn sustainable deficits into unsustainable ones. these debt ratios have increased because of widening current fiscal deficits in response to the crisis, and not necessarily because of previous excessively large deficits. for example, in 2007 ireland and spain had fiscal surpluses and the deficit / gdp ratio in portugal and italy were 3, 1 per cent and 1, 6 per cent respectively. greece on the other hand already had a deficit of 6, 5 per cent. bis central bankers ’ speeches at a time of continued private sector and bank deleveraging, excessively deep public sector austerity is likely to generate and reinforce negative growth and debt dynamics : as growth falls, the debt to gdp ratio increases, and if debt is reduced too fast, growth will fall even more. there is no doubt that some countries have excessive fiscal burdens and unsustainable fiscal positions. those countries have to adjust, and take the pain, but a key question is over what time horizon. nor does it mean that all countries should be following austerity measures. if they do, and the austerity measures proposed are excessive, it will only reinforce the global downturn. the pace of fiscal consolidation has to be more measured, and it is for governments and the central banks to ensure that their interventions keep the markets in check. as krugman and layard have argued, “ at a time when the private sector is engaged in a collective effort to spend less, public policy should act as a stabilising force, attempting to sustain spending. at the very least, we should not be making things worse with big cuts in government spending or big increases in tax rates on ordinary people ”. this does not mean that governments should go on a spending spree. more focus should be placed on the efficiency of government expenditure, to ensure that it is of the type that is likely to generate growth,

t t mboweni : the challenge of employment equity with specific reference to transformation at the south african reserve bank address by mr t t mboweni, governor of the south african reserve bank, at the black management forum annual conference, durban, 13 october 2006. * * * the president of the black management forum, former presidents and executive members of the black management forum, members of the black management forum executive, ordinary members of the bmf, distinguished guests, ladies and gentlemen, when we were approached by the bmf leadership to address this august gathering on challenges of employment equity with specific reference to the transformation process at the south african reserve bank, we were more than pleased to oblige and grabbed the opportunity with both hands primarily because the progress we have made at the bank since 1999 has been remarkable. this does not in any way imply that our current transformation milestones are a destiny already reached, but we thought that we could share with you how we have embraced transformation as a journey which will hopefully someday help us realise the desired south african end - state 1. when one takes into consideration that the bank comprised mainly, but not only, of afrikaner white males in technical and strategic decision making positions in 1998 at the bank, we are certain that all might concur that the road to transformation at the bank was paved with many serious challenges / obstacles and presented an extremely steep gradient of resistance. it is against this opening scene and milieu that we can lay claim that the progress made has been indeed remarkable and to some extent ( maybe ) exemplary. allow me to share with you the facts and figures of employment equity and transformation at the bank. this will entail a little walk back in the history of the bank ’ s workforce movements and composition, but the historic walk will serve as empirical support of the bank ’ s transformation and equity successes. a historically significant starting point would be the year 1994. in that year the bank ’ s total staff comprised 21 per cent blacks and 38 per cent females. the management levels, however, comprised 1 per cent blacks and 12 per cent females. when we joined this transformation journey after 1998 2, we had a workforce that, in total comprised 36 per cent blacks and 42 per cent females, but the management levels comprised only 13 per cent blacks and 19 per cent females. the strategic general management level comprised only 15 per cent blacks and 7 per cent females. thus the workforce composition of 1998 will effectively serve as the starting point of numerical transformation