In­de­pen­dence of SA Re­serve Bank reaf­firmed at ANC ind­aba

The Star Early Edition - - NEWS - Ka­belo Khu­malo

THE ANC yes­ter­day moved to reaf­firm the in­de­pen­dence of the SA Re­serve Bank (Sarb) as the rand tum­bled to sev­en­week lows af­ter the party’s pol­icy con­fer­ence raised more ques­tions on its in­de­pen­dence and func­tions.

The rand fell 2.1 per­cent to R13.4968 against the green­back at 4pm be­fore re­cov­er­ing some­what to R13.4396 an hour later af­ter Fi­nance Min­is­ter Malusi Gi­gaba said he would in­sti­tute re­view pro­ceed­ings in the high court in a bid to have Public Pro­tec­tor Bu­sisiwe Mkhwe­bane’s find­ings and remedial ac­tion on Absa Bank and Sarb set aside.

Gi­gaba said Sarb’s role was a pol­icy ques­tion and there was no in­ten­tion to amend the Con­sti­tu­tion in any man­ner. He ar­gued that the pro­posed con­sti­tu­tional amend­ment was not nec­es­sary.

“The Con­sti­tu­tion does not con­tem­plate the pro­tec­tion of the cur­rency for its own sake, but specif­i­cally in the in­ter­est of bal­anced and sus­tain­able eco­nomic growth,” Gi­gaba said. “These two ob­jec­tives of the Re­serve Bank are mu­tu­ally sup­port­ive and re­in­forc­ing.”

The lo­cal unit was R13.15 in early trade yes­ter­day be­fore news from the con­fer­ence­held dis­cus­sions on whether to na­tion­alise the bank, which later de­ferred the fi­nal de­ci­sion to the party’s elec­tive con­fer­ence in De­cem­ber.

ANC head of the eco­nomic trans­for­ma­tion com­mis­sion, Enoch Godong­wana, ear­lier said the con­fer­ence had re­solved to keep the bank in­de­pen­dent, but to in­ves­ti­gate chang­ing its own­er­ship.

Godong­wana said the in­de­pen­dence of the bank re­mained sacro­sanct.

SA In­sti­tute of Race Re­la­tions chief econ­o­mist Ian Cruick­shanks said it was not ex­cep­tional for a cen­tral bank to be owned by the gov­ern­ment, but that the in­de­pen­dence of its op­er­a­tions and pol­icy was al­ways paramount.

“The sud­den spike in the rand was in­formed by the fear that those in power might re­di­rect mon­e­tary pol­icy and Trea­sury cash flows for their own ben­e­fit,” Cruick­shanks said.

Last month Mkhwe­bane rec­om­mended that the man­date of the bank should be changed from pro­tect­ing the cur­rency and us­ing in­ter­est rates to curb in­fla­tion to a more ac­tive role in the econ­omy.

Sarb yes­ter­day said it had noted the ANC pol­icy con­fer­ence out­comes and that chang­ing its own­er­ship would not af­fect its man­date. “The share­hold­ing of the Sarb has no bear­ing on the pol­icy or reg­u­la­tory role that the Sarb plays,” the cen­tral bank said.

The Sarb spells out its man­date on its web­site: “The pri­mary pur­pose of the bank is to achieve and main­tain price sta­bil­ity in the in­ter­est of bal­anced and sus­tain­able eco­nomic growth in South Africa. To­gether with other in­sti­tu­tions, it also plays a piv­otal role in en­sur­ing fi­nan­cial sta­bil­ity.”

“The achieve­ment of price sta­bil­ity is quan­ti­fied by the set­ting of an in­fla­tion tar­get by the gov­ern­ment that serves as a yard­stick against which price sta­bil­ity is mea­sured.”

The bank said it cur­rently has more than 660 share­hold­ers and its shares were traded on an Over-the-Counter Share Trans­fer Fa­cil­ity mar­ket from within.

Econometrix chief econ­o­mist Azar Jam­mine said the de­ci­sion to have the bank owned by the gov­ern­ment meant very lit­tle. He said the dif­fer­ence was that the con­fer­ence de­ci­sion could be seen as an at­tempt to com­pro­mise its in­de­pen­dence.

“What has hurt the rand more is the re­cent bailout given to South African Air­ways, be­cause it feeds to con­cerns al­ready raised by rat­ing agen­cies that state guar­an­tees to state owned en­ter­prises posed fis­cal slip­page risk,” Jam­mine said.

The South African Re­serve Bank in Pre­to­ria.

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