Kganyago: interest at 5.3% of GDP need not mean fiscal dominance; SARB aims for 3% by end-2027
Victoria Shinder3 min readSouth African Reserve Bank (SARB) Governor Lesetja Kganyago used an address to the Mapungubwe Institute for Strategic Reflection's Forum on Africa and Geopolitics, published on the SARB's website with the date 28 September 2026, to describe what he called a "new global disorder" — and to argue that South Africa is better placed for it than its growth record suggests. The speech is two and a half weeks old; it is written up here as a reading of the SARB's view, not as news of the day.
Five dangers. Kganyago structured the speech around climate change, global imbalances, artificial intelligence, debt and fiscal dominance. From a central-bank perspective, he said, the world is heading into more supply shocks that create bursts of inflation; he cited oil prices fluctuating around $100 a barrel with few tankers getting through the Strait of Hormuz, and record fuel crack spreads. He warned that large trade imbalances are often resolved chaotically, that experts think the next financial crisis may come from a cyberattack, and that long-term interest rates in most advanced economies have reached multi-decade highs as the "convenience yields" of their debt evaporate and reserve managers diversify into gold, euros and other currencies.
On fiscal dominance. South African government debt has roughly tripled since the global financial crisis, and interest now consumes around 5.3% of GDP, against 4% in the US, 2.8% in Britain and 2.1% in France, he said. From an emerging-market central banker's perspective, he argued, burdens like these do not have to trigger fiscal dominance; instead they show that central banks need independence and courage. He quoted IMF Managing Director Kristalina Georgieva's warning against "monetary policy cowboys riding to the fiscal rescue".
On South African policy. Inflation has been above target for about six months, pushed away by the energy shock from the war, Kganyago said, compared with 67 months since US inflation was last at target. The SARB's strategy is to keep policy tight enough that a temporary shock does not become persistent inflation; it has raised its policy rate to ensure inflation returns to 3%, which it currently expects around the end of next year. He added that there is growing conviction that South Africa's debt ratio has peaked.
Markets. Better macroeconomic prospects, he said, have shielded South Africa from the 2026 global bond repricing: long-end yields have been contained at around 9%, roughly where they were at the end of 2025, while the US 30-year yield is at its highest since 2007 and Japan's since 1996. The rand, he added, is holding up with unusually low volatility.
The weak spot. Growth has averaged about 0.6% a year over the past decade; the SARB thinks potential growth is now roughly double that, but still low. Electricity, he noted, is now reliably available but costs about twice what it did in 2020. His conclusion: the world is more dangerous and less well governed, and if South Africa does not use its improved macro position, "it is unlikely we will get much outside help".
Source: South African Reserve Bank, "Policy challenges of the new global disorder" — https://www.resbank.co.za/en/home/publications/publication-detail-pages/speeches/speeches-by-governors/2026/kganyago-policy-challenges