Re­serve Bank man­date sacro­sanct, ANC vows

Party man­i­festo states mon­e­tary pol­icy must take em­ploy­ment, eco­nomic growth into ac­count

Business Day - - FRONT PAGE - Natasha Mar­rian Po­lit­i­cal Ed­i­tor

The ANC in­sists that it will not tinker with the man­date of the SA Re­serve Bank, de­spite its elec­tion man­i­festo stat­ing that mon­e­tary pol­icy has to take em­ploy­ment and eco­nomic growth into ac­count.

Enoch Godong­wana, the party’s head of eco­nomic trans­for­ma­tion, told Busi­ness Day that the in­ten­tion be­hind the prom­ise on the Bank was “to im­prove co-or­di­na­tion be­tween fis­cal and mon­e­tary pol­icy”.

How­ever, an­a­lysts have warned that the man­i­festo points to uncer­tainty about the party’s com­mit­ment to the Bank’s in­de­pen­dence.

While the man­i­festo speaks to the man­date of the cen­tral bank, its man­date can­not be changed with­out an amend­ment to the con­sti­tu­tion.


The gov­ern­ing party says in its man­i­festo: “The ANC be­lieves that the SA Re­serve Bank must pur­sue a flex­i­ble mon­e­tary pol­icy regime, aligned with the ob­jec­tives of the sec­ond phase of the tran­si­tion. With­out sac­ri­fic­ing price sta­bil­ity, mon­e­tary pol­icy must take into ac­count other ob­jec­tives such as em­ploy­ment cre­ation and eco­nomic growth.”

Fi­nance min­is­ter Tito Mboweni, a for­mer Bank gover­nor, said there was “noth­ing new” in the man­i­festo, as the Bank “has al­ways pur­sued mon­e­tary pol­icy in a flex­i­ble man­ner and has al­ways taken the op­ti­mal health of our econ­omy into con­sid­er­a­tion”.

How­ever, the in­de­pen­dence of the Bank has been un­der at­tack in re­cent years and is at the heart of the pol­icy dif­fer­ences be­tween the fac­tion aligned to for­mer pres­i­dent Ja­cob Zuma and the group­ing sup­port­ing Pres­i­dent Cyril Ramaphosa. The ANC re­solved at its 2017 elec­tive con­fer­ence to na­tion­alise the Bank.


The Bank had to go to court to nul­lify an in­struc­tion by pub­lic pro­tec­tor Bu­sisiwe Mkhwe­bane, who in­structed par­lia­ment in 2017 to change its pri­mary man­date, which is to pro­tect the value of the rand in the in­ter­est of bal­anced and sus­tain­able growth.

The mat­ter hardly bodes well for in­vestor con­fi­dence, par­tic­u­larly in a year in which there is uncer­tainty around the lead­er­ship of the Bank.

Gover­nor Le­setja Kganyago’s first term ends in Novem­ber, and the Bank also needs to find a new deputy gover­nor fol­low­ing

Fran­cois Groepe’s res­ig­na­tion in De­cem­ber 2018. Fel­low deputy Daniel Mminele’s sec­ond term ends in June.

The Bank has yet to ap­point a re­place­ment for mon­e­tary pol­icy com­mit­tee mem­ber Brian Khan, who re­tired in 2018.

Kganyago has in­di­cated that he would be will­ing to stay for a sec­ond term if he was asked to do so.


Godong­wana said that ac­cord­ing to the Nas­rec res­o­lu­tion, the man­date of the cen­tral bank is sacro­sanct and this could not be amended through a man­i­festo. “The in­ten­tion is to prop­erly co­or­di­nate fis­cal and mon­e­tary pol­icy to achieve the ob­jec­tive of growth and em­ploy­ment.”

The chief econ­o­mist at Econometrix, Azar Jam­mine, said the man­i­festo showed that there re­mained sup­port within the ANC for what could be in­ter­preted as in­ter­fer­ence in Bank poli­cies.

In­ter­fer­ing with the in­de­pen­dence of the cen­tral bank was very dan­ger­ous, but the gov­ern­ment did not al­ways “fall for what the ANC said”.

Jam­mine said it is pos­si­ble that this view in the ANC could in­flu­ence the ap­point­ment of a new Bank gover­nor. How­ever, Kganyago is highly re­spected both lo­cally and in­ter­na­tion­ally.

An in­de­pen­dent an­a­lyst said that while the man­i­festo prom­ise was writ­ten “sen­si­bly and with sen­si­tiv­ity”, it does not “al­ter the fact that es­sen­tially you have a po­lit­i­cal party com­ment­ing on the role of what should be a fiercely in­de­pen­dent in­sti­tu­tion”.

He said it would be con­struc­tive if the in­ten­tion was to sim­ply co-or­di­nate mon­e­tary and fis­cal pol­icy. “Pol­icy has to be co­or­di­nated; it is fruit­less if they worked against each other.”

The Bank it­self would not be drawn on the mat­ter as it is set to hold a mon­e­tary pol­icy com­mit­tee meet­ing this week and has en­tered its blackout pe­riod.


/Reuters (See Pages 2 and 3)

Poll plans: For­mer pres­i­dent Ja­cob Zuma and Pres­i­dent Cyril Ramaphosa at the ANC’s elec­tion man­i­festo launch at the Moses Mab­hida Sta­dium in Dur­ban on Satur­day. The ANC is the first party to de­liver its elec­tion man­i­festo ahead of what is seen to be the most hotly con­tested polls since 1994.

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