Court to hear Bank’s case over mandate
• Governor says central bank will remain resolute
The high court is due to hear the review application by the Reserve Bank of Public Protector Busisiwe Mkhwebane’s remedial action on the Bank’s mandate. Speaking at the Bank’s annual general meeting, governor Lesetja Kganyago said the Bank would not yield to political pressure.
The high court is due to hear the highly anticipated review application by the Reserve Bank of Public Protector Busisiwe Mkhwebane’s remedial action on the Bank’s mandate.
Speaking ahead of the case at the Bank’s annual general meeting last week, governor Lesetja Kganyago said the Bank remained resolute in its mandate and would not yield to political pressure.
Kganyago submitted an application to the High Court in Pretoria to review and set aside sections of Mkhwebane’s report on the apartheid-era lifeboat granted to Bankorp, which was subsequently acquired by Absa.
Mkhwebane has said she will not oppose the Bank’s review application.
“We have challenged this remedial action on a number of grounds and the matter will be heard even though the public protector has chosen not to oppose our submissions,” said the governor.
The Bank’s review application sought protection of its mandate and to tackle the Bank’s shareholding.
Kganyago said it was imperative for the Bank to get confirmation of its mandate from the high court.
Mkhwebane released the CIEX report in June, when she ordered Parliament to amend the Constitution to change the mandate of the Bank, which would effectively put an end to inflation targeting.
She also ordered Absa to repay more than R1bn.
Parliament and Absa have joined the Bank’s review application to challenge Mkhwebane’s findings.
Mkhwebane said in the report the Bank’s mandate should be to promote balanced and sustainable economic growth, while ensuring that the socioeconomic wellbeing of citizens was protected.
The Bank’s primary aim is to protect the value of the rand in the interests of balanced and sustainable growth. This is done through inflation targeting.
“Apart from the issue of whether the public protector has overstepped her legal powers … or the issue that the remedial actions proposed were unrelated to the original complaint under investigation, these developments have opened the door to a debate about the appropriateness of our mandate and of the inflation-targeting mandate specifically,” Kganyago said on Friday.
Price stability, or the protection of the value of the currency, was a core function of central banks, he added.
“Our Constitution is very clear: this is, correctly, a SARB [South African Reserve Bank] function and we should protect the value of the currency in the interest of balanced and sustainable growth in the economy.”
Private shareholders did not have a say in how the Bank was run and there was no obvious case for changing the Bank’s shareholding structure, he said.
“Private shareholding represents an additional layer in the governance framework, to strengthen accountability and transparency,” Kganyago said.
North West University economics professor Raymond Parsons said the developments generated additional pressure on the Bank.
“All this injects an unnecessary additional element of uncertainty into the economic debate when SA can least afford it, and when levels of confidence need to be boosted instead.”
WE HAVE CHALLENGED THE ACTION ON SEVERAL GROUNDS AND THE MATTER WILL BE HEARD