19 March 2002
Chairperson,
Deputy Minister of Finance of the Republic of South Africa,
Distinguished Speakers
Distinguished Participants
Ladies and Gentlemen;
Let me first and foremost thank you for choosing South Africa as the venue for this 20th conference of the Government Borrowers Forum, (GBF).
I hope your choice of our country as venue will be found to have been worthwhile. It is indeed an honour for us to host delegates of your calibre from so many countries.
A gathering of this sort highlights that the world continues to shrink in size and as many have said before me, it is indeed becoming a 'global village' facing the same challenges but unfortunately reacting differently to them.
This gathering emphasizes that these challenges should be tackled in an integrated manner since there is no nation that can 'continuously' benefit while leaving others behind.
For those nations, which are a step-ahead on growth and development, this gathering indicates that they have a responsibility to discuss with those lagging behind. They need to share with them the policies that have been adopted and the strategies that have been implemented, which have contributed to their achievements.
Those who are a step behind have to analyse the challenges facing them and decide how to move ahead and 'catch-up' with those that have established themselves. However, for this to happen, it is important that both the developing and developed world to cultivate a development path that will benefit all nations in this global village.
At the core of this is the understanding that it is up to governments to create an enabling environment for increased development, trade and foreign direct investment. Good governance includes prudent financial management, fiscal discipline and debt management.
Ladies and gentlemen, while the Government Borrowers Forum falls primarily in the government securities market segment, it is of interest to note that the Forum will also discuss the broad challenges in the world financial markets. The world financial markets have evolved from the 1970s, and earlier where emphasis was placed on building country and regional economic and financial borders.
Learning and adapting has become the single-surviving technique for all countries, hence the importance of this gathering. Financial markets have shown a formidable capacity to learn and to adapt to new patterns of financial policy, in every country and every region.
Technology has also created a situation where transactions worth billions of rands are done at a touch of a button.
The financial regulations and accounting rules have been re-aligned so that they become integrated globally.
Countries wanting to benefit from these new global arrangements and world order have had to comply with the rules of the game.
Part of these rules, as you know better as experts in this field, is that in order to have stability in the financial markets, a government needs to be transparent in its dealings with the financial sectors, in order to remove uncertainty.
In addition, in order to develop an efficient domestic capital market that becomes a member of the global financial market, a number of factors are identifiable. These include the following:
South Africa has taken these factors into consideration, and in line with the global developments, has also adapted to new global systems and policies. We have sought to create the right environment for economic activity to take place, and have ensured that all the economic fundamentals are in place.
What we also pride ourselves on is our sound fiscal policy, and part of our infrastructure includes the Public Finance Management Act No.1 of 1999. The Act regulates financial management in the national, provincial and local governments. It also ensures that all revenue, expenditure, assets and liabilities of these spheres of government are managed efficiently and effectively.
The Act also provides for the responsibilities of persons entrusted with financial management in government departments. Further, it also lists the purposes for which the Minister of Finance, as an executive authority, may borrow money.
Our macro-economic framework, the Growth Employment and Redistribution (Gear) programme is designed to attain financial stability and growth. Among other successes, it has reduced the budget deficit from a high of 8% of GDP six years ago to the current level of 1.4%.
Statutorily, the South African Reserve Bank (SARB) which is independent of Government, has reduced inflation from a two-digit figure about 6 years ago to less than 7% in 2002.
Having mentioned all this, the reality remains that the global financial and economic picture is far from perfect. The financial infrastructure in the developing world, especially Africa, is virtually non-existent. There is a need to seriously look into ways of developing the financial markets of African countries, as the international financial system will also benefit by having more participants.
Another sore point in the North-South relations is the question of debt relief. Some countries find themselves in such debt traps that they have to keep on borrowing in order to pay off the interest, thus sinking more into debt.
We trust that the Financing for Development Conference being held in Mexico this week will look into such issues, with a view to addressing the question of debt forgiveness, as well as the general inequalities within the world financial system.
These inancial issues are among matters that Africa is trying to address through the New Partnership for Africa's Development, (Nepad) which is driven by Heads of States and Government. Nepad is the most comprehensive programme produced by Heads of States and Government in this continent, and it is unique in many respects.
The fact that it was conceptualised by, and is being led by Heads of States ensures its success, as the political will and commitment is guaranteed. Through Nepad, Africa is coming up with solutions, and calling for partnerships with the West, instead of merely asking for handouts or sympathy.
The Heads of States and Government Nepad Implementation Committee has prioritised peace and security, democracy, political and economic governance, peer review mechanism and code and conduct, including capacity building in areas such as administrative and civil services as well as parliamentary oversight.
Some of the principles of Nepad are the following:
Through this programme, Africa is committing itself to working towards rebuilding this continent, and extricating it from economic stagnation and underdevelopment.
What should be emphasised is that Africa is now doing things differently, and we expect our partners and potential partners to recognise this. I must say we are encouraged by the response of G8 leaders who have expressed strong support for NEPAD.
The leaders of the G8 have appointed a committee of high-level personal representatives to work with the NEPAD states to develop a detailed, implementable plan of action for adoption at the next G8 Summit in Canada in June 2002.
African countries have shown their seriousness about turning the situation around. From the financial side, we are calling for the restructuring of the global financial architecture to enable Africa to receive the required capital flows.
Through this, the continent would be able to meet the international development goals and achieve the required growth that will address poverty and underdevelopment.
Distinguished participants, given the huge tasks facing all of us, we regard gatherings such as this one as being important, as they allow an opportunity for experts such as yourselves from the continent and beyond, to share thoughts on how best to assist countries on the development path.
We invite yo to join us in this continent, on the journey towards eliminating poverty and underdevelopment, and a journey towards levelling the playing field in the global economic arena, to allow the developing world to compete without disadvantage.
I wish you well in your deliberations and hope that you will enjoy your stay in our country.
I thank you.