Policy recommendations are made in respect of the progressive synchronisation of exchange rate regimes across regional economic communities and the AU, trade dependence and diversification, and the tracking and consistent use of countercyclical monetary and fiscal policy to build resilience. [...] Although the study is limited to the 20-year period prior to the COVID shock in 2020– 2021, the historical review of capacity to recover from shocks is relevant to the current period of escalating geopolitical tensions and the exogenous shocks these generate on the African continent. [...] There is little evidence to suggest that there is any significant difference in the growth performance of the heavily or lightly managed floaters, or those in free trade areas versus those in customs unions.16 For proponents of fixed pegs, the volatility of GDP growth and inflation, the encouragement of speculative over productive investment and the costs of monetary and fiscal management from buf. [...] Policy responses National governments’ authority to manage both the structural growth path and the volatility of the business cycle gives them some potential to use the tools of monetary policy and of fiscal policy to impact the external debt, trade and investment positions of their national accounts. [...] In view of the multi-generational objectives of the AU to move progressively and consecutively towards a customs, monetary and fiscal union, countries with currency pegs may wish to consider floating their currencies within the limits of other REC members’ and a global currency (such as the US dollar, the euro or the trade-weighted XDR).
- Pages
- 74
- Published in
- South Africa
