Stop pro­tec­tor in her tracks, SARB boss urges court


THE South African Re­serve Bank has warned that the call by Public Pro­tec­tor Bu­sisiwe Mkhwe­bane to amend the con­sti­tu­tion could un­der­mine its role to en­sure fi­nan­cial and eco­nomic sta­bil­ity.

It said her re­port had harmed the econ­omy and the rand, with a pos­si­bil­ity of fur­ther credit-rat­ing down­grades.

In an ap­pli­ca­tion in the Pre­to­ria High Court yes­ter­day, Re­serve Bank gover­nor Le­setja Kganyago urged the court to stop Mkhwe­bane in her tracks be­fore fur­ther harm was done to the econ­omy.

Kganyago said rat­ings agen­cies had al­ready warned of more down­grades if the rec­om­men­da­tion was im­ple­mented.

He de­scribed the re­port by Mkhwe­bane “as gross over­reach” and warned that the public pro­tec­tor did not have pow­ers to di­rect Par­lia­ment to amend the con­sti­tu­tion.

“The public pro­tec­tor’s re­me­dial ac­tion must be set aside.

“From the mo­ment it was an­nounced, it has had a se­ri­ous and detri­men­tal ef­fect on the econ­omy, and for as long as it re­mains in place, it holds the risk of caus­ing fur­ther rand de­pre­ci­a­tion, fur­ther rat­ings down­grades and sig­nif­i­cant cap­i­tal out­flows,” said Kganyago.

“This gross over­reach by a Chap­ter 9 in­sti­tu­tion must be stopped in its tracks so that cer­tainty and pre­dictabil­ity about the Re­serve Bank’s role in our democ­racy is af­firmed,” he stated.

Kganyago also ar­gued that the role of the SARB was price sta­bil­ity and pro­tec­tion of the cur­rency.

“The public pro­tec­tor wants to change all this.

“Her re­me­dial ac­tion, if im­ple­mented, would take the core func­tion of cen­tral banks away from the Re­serve Bank,” he said.

“Chang­ing the pri­mary ob­jec­tive of the Re­serve Bank in this way threat­ens to un­der­mine the crit­i­cal con­tri­bu­tion of the Re­serve Bank to the sta­bil­ity of our fi­nan­cial sys­tem, which is cen­tral to sus­tain­able growth, job cre­ation, the re­duc­tion of in­equal­ity and poverty al­le­vi­a­tion,” said Kganyago.

Mkhwe­bane made the rec­om­men­da­tion after an in­ves­ti­ga­tion into the CIEX Re­port, which had found that the bank had given Absa an il­le­gal bailout of more than a bil­lion rand dur­ing the apartheid era.

Kganyago urged the court to set aside the find­ings and rec­om­men­da­tion by Mkhwe­bane to change the man­date of the SARB.

He said what she wanted would make it dif­fi­cult to achieve eco­nomic growth and main­tain sta­bil­ity in the mar­ket.

Mkhwe­bane’s find­ings had wreaked havoc in the mar­ket, with the rand los­ing 2% of its value moments after she made the an­nounce­ment.

Kganyago also ac­cused Mkhwe­bane of not giv­ing the SARB an op­por­tu­nity to re­spond to her re­port. She was sup­posed to give them the re­port five days be­fore she re­leased it, but she did not do it, Kganyago said.

Absa took the same po­si­tion that it was not given the re­port in ad­vance so it could re­spond to Mkhwe­bane’s al­le­ga­tions.

‘SET ASIDE HER FIND­INGS’: Re­serve Bank Gover­nor Le­setja Kganyago

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