global growth outlook is likely to persist for some time, and we need to be mindful that the prevailing financial crisis has already lasted five years, with no end in sight, the challenges facing the domestic economy are daunting. but not all of our problems can be ascribed to these global factors. there are numerous underlying structural problems in the economy which are exacerbated, but not necessarily caused, by these global developments. in line with the weak and deteriorating global outlook, the bank has been progressively downgrading its economic growth forecasts over the past year. growth in 2012 is expected to average around 2, 7 per cent, down from 3, 1 per cent in 2011. the most recent forecast for bis central bankers ’ speeches 2013 is a growth rate of 3, 8 per cent, but the risks are seen to be on the downside. according to reuters, the market consensus forecast for 2013 is 3, 3 per cent. growth rates of this order of magnitude will not have an appreciable impact on south africa ’ s unemployment rate which currently stands at 24, 9 per cent. it is instructive that during the high growth years between 2004 – 2007, when growth averaged around 5 per cent, unemployment declined to 21, 9 per cent but this was quickly reversed following the crisisinduced recession in 2009. so if these patterns are to be repeated, we would need a number of years of significantly higher growth than we are currently expecting simply to get back to pre - crisis levels of unemployment. however, the sustainable growth rate itself is constrained by the potential output of the economy, which, in turn, is determined by capacity and other structural constraints. at a simple level that implies that if we have unemployed resources or spare capacity in the economy, output can be increased in a non - inflationary manner. research done in the bank prior to the crisis showed that the potential output growth of the economy was between 4 and 4, 5 per cent. since the crisis, that has declined to around 3, 5 per cent. this decline may have been due in part to some destruction of capacity and we also now know that growth will be constrained by the lack of adequate electricity provision until sometime next year at the earliest. i should note that this does not imply that a growth rate in excess of 3, 5 per cent would necessarily be inflationary. currently the economy still has a negative output gap, which we estimate to be around 3, 5 per cent, which is indicative

opening remarks by ms fundi tshazibana, deputy governor of the south african reserve bank at the market practitioners group forum 6 november 2020 ladies and gentlemen, good morning and welcome to the market practitioners group ( mpg ) forum. the mpg is a joint public and private sector body that was established by the south african reserve bank ( sarb ) to facilitate decision - making on matters relating to the reform of interest rate benchmarks in our country. since its establishment in october 2018, the mpg has had various interactions with industry stakeholders and has set up substructures to craft the design of alternative interest rates in south africa. the mpg also leads south africa ’ s transition to a new and more robust interest rate dispensation. importantly, the work of the mpg and its substructures, which i will allude to and contextualise shortly, forms part of a global agenda to strengthen existing interest rate benchmarks and identify alternative near risk - free rates. let me now briefly provide some context for those who may not be aware of the origins of the work on the reform of interest rates. in the major financial markets, reference rates, such as the london interbank offered rate ( libor ) and euro interbank offered rate ( euribor ), are widely used as benchmarks for a large volume and broad range of financial products and contracts. these rates encountered episodes of attempted market manipulation and false reporting. this, together with the decline in liquidity in interbank unsecured funding markets after the global financial crisis ( gfc ), undermined confidence in the reliability and robustness of existing interbank benchmark interest rates. page 1 of 4 these developments meant that the lack of integrity in the determination processes of some critical reference rates represented a serious source of vulnerability and systemic risk. as such, the financial stability board undertook a fundamental review of major interest rate benchmarks. in line with global developments, the sarb established the mpg following the publication of the ‘ consultation paper on interest rate benchmarks in south africa ’. the consultation paper, among other things, considered whether there was a case for the reform of the johannesburg interbank average rate ( jibar ) and explored the development of new benchmarks. the case for reforming the jibar, which is the most widely used reference rate in south africa and is therefore of systemic importance, was informed by a number of concerns, including that : i. the jibar is currently not