Johannesburg - The key message from the weekend's G20 meeting in London is that there will be no return to "the old normal" even as tentative signs of recovery emerge in the global economy, South Africa's Finance Minister, Pravin Gordhan, said on Sunday.
Gordhan has just returned to the country, together with the Deputy Governor of the central bank, Dr Renosi Mokate, from the meeting.
Gordhan highlighted one danger as banks thinking that as credit lines begin to work properly, the rescue packages can be paid back.
"The outlook remains cautious and it is too early to conclude that the recovery has gained traction. In light of this, the G-20 countries committed to maintaining their current fiscal and monetary policy stimulus policies," said Gordhan.
"The G-20 countries agreed that the approach on exit strategies, and the shape that these will take, depends on the sustainability of the economic recovery," he said.
In answer to a question from I-Net around concerns that South Africa is lagging the global recovery, he said that we live in an integrated global economy, but the start of the recession in SA also lagged and therefore it is logical that the recovery will also come with a bit of a lag.
"The precise nature and timing of the exit strategies will be governed by national conditions," he said.
Gordhan said the G20 had reviewed the state of the world economy and concluded that stimulus packages should remain in place until recovery is secured.
He also said that while fiscal and monetary policies should place the economy on a better track, it is also time to plan ahead.
He spoke about the need for talks locally between the public and private sector on strengthening the financial system in light of changes on issues like capital requirements, leveraging, corporate governance and lending in a new global architecture.
"Life moves on and new challenges emerge," he said.
He said the G20 had noted that strong lobbies were developing that were not in favour of revamping the financial regulatory system.
He said that further progress was made at this meeting in expanding the voice of smaller countries, with a second round of quota loosening due by January 2011, in which 5-7% of votes are being re-apportioned to developing countries.
- I-Net Bridge