Abstract
Recent development in the practice of macroeconomic policy has increased the importance of monetary and fiscal policy. Monetary policy within BRICS countries has shifted towards the setting of interest rates as the key monetary instrument, along with the adoption of inflation targets as key monetary policy objectives. It is well accepted that there is no one set of macroeconomic policies that guarantees sustained growth and development in the economy. However, the BRICS countries have been following a similar trend with regard to the exchange rate policy. This is shown by the fact that the BRICS countries have moved away from using a pegged exchange rate regime towards a managed floating exchange rate regime which is in contrast with the recommendations of the Washington Consensus. On the fiscal side, the BRICS countries agreed to spend only what is necessary in order to avoid the ballooning local government debt. Summarily, the BRICS countries have performed well economically and socially although there are still some room for improvement. However, there are still other BRICS members who have government debt that are well above half of their Gross Domestic Product. Alignment of policy regimes would strengthen the macroeconomic base of the BRICS. It is recommended that all BRICS members need prioritise inclusive governance that would checkmate social ills such as poverty, inequality and unemployment, while promoting social inclusion.
Highlights
Brazil, Russia, India, China and South Africa are widely recognised as the world’s most dynamically growing economies that have the potential to be the world’s largest nations if everything goes as predicted by Golden Sachs experts in 2003
The BRICS nations are expected to be larger than the G6 countries in the fifty years if Goldman (2003, P.05) predictions are correct, there are some known differences in macroeconomic policies that have been adopted by the different BRICS economies over the past few decades
South Africa Revenue Services commonly known as SARS collects all taxes centrally, The fiscal policies adopted by BRICS nations reflect that all five nations have implemented some measures aiming at decrease their budget deficits especial after the 2008 global financial crisis
Summary
Brazil, Russia, India, China and South Africa are widely recognised as the world’s most dynamically growing economies that have the potential to be the world’s largest nations if everything goes as predicted by Golden Sachs experts in 2003. The BRICS nations are expected to be larger than the G6 countries in the fifty years if Goldman (2003, P.05) predictions are correct, there are some known differences in macroeconomic policies that have been adopted by the different BRICS economies over the past few decades This could be due to the fact that each country has a unique population size with different cultural, financial and political background. Supposed to promote economic growth and development and at the same time, limit the exposure of a country to global shocks This provides the underlying reasons as to why this mini-research article investigates whether or not the BRICS countries have been following the same trajectory with regard to macroeconomic policies for the past fifteen years. This will be done by examining the extent to which the monetary and fiscal policy frameworks of BRICS have differed
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