IMF BOSS agrees with SA policy

INTERNATIONAL Monetary Fund head Dominique Strauss-Kahn agrees with most points of South Africa's economic policy, including inflation targeting.

INTERNATIONAL Monetary Fund head Dominique Strauss-Kahn agrees with most points of South Africa's economic policy, including inflation targeting.

He told reporters yesterday during a two-day visit to South Africa that the budget, released by Finance Minister Pravin Gordhan last month, was in line with what the economy needed.

He said inflation targeting is the right policy for South Africa, however, the policy had to be used "flexibly".

"The South African economy has weathered the immediate effects of the global crisis, mainly due to sound macro-economic policies, its flexible monetary and exchange rate regime, and a well supervised financial system," Strauss-Kahn said in Johannesburg.

He said during his visit he had had productive discussions with the authorities on the country's economic outlook and challenges.

Strauss-Kahn said fiscal policy had been appropriately countercyclical, striking the proper balance between supporting output and preserving medium-term sustainability.

He said, however, South Africa continued to face difficulties as unemployment was extremely high.

South Africa's success had important implications for the rest of Africa.

"As a member of the G20, it has a leadership role to play in advancing prosperity across the continent and making the voice of Africa heard internationally."

Strauss-Kahn said the IMF was still not prepared to resume lending to Zimbabwe, citing concerns about the country's political situation. He said he discussed Zimbabwe during his talks on Tuesday with President Jacob Zuma, who said that aid should resume flowing to Harare.

Zimbabwe owes about $140million (R1,3billion) in arrears to the IMF.

Straus-Kahn is on an African tour that began in Kenya. His next stop will be Zambia. - Sapa, Reuters and AFP

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