Public Protector speech ‘bizarre’
Mkhwebane’s suggestions are unlawful
AS THE CRITICISM of Public Protector Busisiwe Mkhwebane’s proposal to change the mandate of the SA Reserve Bank mounted, ratings agency S&P’s Global Ratings yesterday weighed in on the matter, warning against the meddling with the central bank’s independence.
Mkhwebane on Monday opened a can of worms when she said she would approach Parliament in order to change the mandate of the South African Reserve Bank (Sarb), bringing to an end the institution’s inflation targeting role.
Her comments saw the rand plummet more than 2 percent.
S&P’s downgraded South Africa to sub-investment grade on Monday, following a massive cabinet reshuffle, said yesterday that it was “critical” that the operational independence of the central bank remained.
“We would consider it critical that the operational independence of the Reserve Bank remains untouched lest we would see weakening policy flexibility in monetary affairs.
“Depending on the severity of the changes (to the central bank’s independence), a rating action could indeed be one consequence,” S&P’s sovereign analyst, Moritz Kraemer, said.
The Reserve Bank and the Banking Association of South Africa (Basa), have also come out strongly against the Public Protector’s stance, with Basa saying the mooted remedial actions were “alarming”.
Basa managing director, Cas Coovadia, said: “The role and independence of the (Reserve Bank) is critical in maintaining what little certainty remains in our already fragile economy.
“The banking sector has repeatedly emphasised this point, and once again objects in the strongest possible terms to any interference in the operations and function of the Sarb.”
The Reserve Bank said yesterday that Mkhwebane’s suggested constitutional changes would strip the bank of its key competency to protect the value of the currency and securing price stability.
“The remedial action proposed will have a negative impact on the independence of the Reserve Bank,” it said.
It said Mkhwebane’s proposed remedial action prescribed fell outside her powers and was unlawful.
The Bank said it intended to bring urgent review proceedings to have the remedial action set aside.
“The Reserve Bank acts in terms of its constitutional mandate in the interests of the welfare of all South Africans,” the bank said.
Armand Greyling, a law and policy analyst at AfriBusiness, said: “What the Public Protector is aiming to achieve with her bizarre recommendation is to completely strip the Reserve Bank of its crucial independence.
“This will make the bank subservient to government, effectively attempting to nationalise the banking sector and promote governmental goals, rather than sustainable economic growth to the benefit of all South Africans.”
However, trade union federation Cosatu yesterday came out in support of Mkhwebane.
Absa shares and those of all the other South African banks took a beating after Public Protector Busisiwe Mkhwebane’s speech on Monday.