Cape Town - South African Finance Minister Pravin Gordhan criticized developed nations for “self- justifying” comments that emerging-market countries are to blame for the turmoil their economies are facing.
While finance ministers and central bank governors from the Group of 20 that met in Sydney over the weekend had “constructive” talks about global cooperation, comments by some officials in advanced economies are concerning, Gordhan told lawmakers in his budget speech in Cape Town today.
“We remain concerned about the self-justifying narrative from certain quarters in the developed world -- the idea that emerging markets are the ‘problem,’ that they must ‘get their house in order’ and that global cooperation for a more humane and sustainable future is a project for another day,” he said. “These are voices from precisely those places where huge regulatory failures led to the financial earthquake we have experienced.”
Emerging-market currencies, including South Africa’s rand, have come under pressure since last year as the U.S. Federal Reserve began reducing its monetary stimulus that’s helped fueled inflows into developing nations. Gordhan has previously called on the Fed to be more cognizant of the impact of its actions on emerging markets.
“We live in world where particularly big economies can have hugely positive effects on the world economy and small economies,” Gordhan told reporters in Cape Town, adding that every nation took responsibility when the G20 met in London to discuss the financial crisis in April 2009. “In that context, emerging markets played a very important role; they carried 50 percent of global growth, they now are responsible for one-third of the global GDP, so they are not insignificant in terms of their contribution to global economic welfare.”
The rand has lost more than a fifth of its value against the dollar since the beginning of last year, stoking inflation and prompting the Reserve Bank to raise its benchmark interest rate for the first time in more than five years.