ANC's reserve bank meltdown likely to take centre stage at top 6 meeting

2019-06-06 10:42
(Photo by Gallo Images/Sowetan/Vathiswa Ruselo)

(Photo by Gallo Images/Sowetan/Vathiswa Ruselo)

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Public clashes of top ANC officials around the expansion of the mandate of the South African Reserve Bank (SARB) are likely to be a talking point in a meeting of the party's top six on Monday.

Two senior party officials, who asked to remain anonymous, told News24 on Wednesday that recent contradictory statements from secretary general (SG) Ace Magashule, Minister of Finance Tito Mboweni and the party's economic transformation head, Enoch Godongwana, would form part of the discussion by the top six.

On Tuesday afternoon, Magashule held a media briefing to outline the outcomes of the party's national executive committee (NEC) lekgotla that was held over the weekend.

During the briefing, Magashule made a startling revelation that the NEC had resolved to expand the reserve bank's mandate beyond price stability to include growth and employment.

"You don't need to change the Constitution to do that," Magashule said. Shortly after he made this revelation, Godongwana released a statement disputing this, saying that the NEC lekgotla had no policy-making capacity.

ALSO READ: FIRST TAKE: Ramaphosa must act over Magashule's disastrous SARB statements

Godongwana denied that the lekgotla had made the decision Magashule mentioned.

"We can't have policy uncertainty every time everybody raises the reserve bank. It's unacceptable." 

Godongwana's statement was closely followed by reaction from Mboweni, who took to social media.

In a tweet, Mboweni said: "Government sets the mandate for the SARB. There is no quantitative easing thing here. The primary mandate of the SA Reserve Bank is to protect the value of the currency in the interest of balanced economic growth and development."

NEC member Tony Yengeni responded to the tweet, saying Mboweni should listen to the ANC very carefully and familiarise himself with the party's manifesto and national conference resolutions very fast.

ANC spokesperson Pule Mabe and Godongwana were busy with back-to-back media interviews on Wednesday in an attempt to calm the situation.Economist Sifiso Skenjana told Fin24 that the confusion created by the ANC's conflicting remarks was unlikely to frighten investors much more than they have already been.

The latest figures from Statistics South Africa show that the country's economy has shrunk by 3.2% quarter-on-quarter in the first quarter of 2019 - the biggest plunge since the 2008 global financial crisis and the second-highest drop in more than two decades, Fin24 reported.

'I expect fireworks'

According to two NEC members, the confusion around policy will take centre stage at the next top six meeting. The meeting of the top six on Monday is intended to discuss the legislative arm of government.

The ANC's Dakota Legoete told News24 the top six would be discussing the setup of parliamentary committees and sub-committees. He could not say if there would be a discussion around the reserve bank.

One insider, however, said Magashule's "careless" actions after the NEC lekgotla would take centre stage. "The idea that we can change the mandate of the reserve bank now, considering that we [are] still in an economic slump will is ludicrous. Government cannot afford to nationalise or change the mandate of the reserve bank.

"We can't even afford to buy out the shareholders of the reserve bank. I can't see why the SG would be careless enough to make such bold statements with investors and the world closely watching, given that we have just come back from the elections.

"Another party insider said while the nationalisation of the reserve bank formed part of discussions during the Nasrec conference, he was disappointed by Magashule's statement.

"This is a point of contention for comrades. We all have our views on what the reserve bank should look like going forward. The president warned us just Friday against speaking with different voices. This entire situation undermines his authority. This goes to show how dangerous the SG can be. Ramaphosa will not and cannot take this lying down. I expect fireworks on Monday," the NEC member said.  

The EFF, which has advocated for the nationalisation of the reserve bank, joined the conversation and condemned Mboweni calling him "arrogant" and personally conflicted. 

The EFF's Mbuyiseni Ndlozi said, with the party's 44 seats, it would table a Bill to nationalise the reserve bank.

"The ruling party must also show courage in implementing their own resolution and should never allow neo-liberals like Mboweni to bully them into silence."

President Cyril Ramaphosa has been largely silent on the matter and its impact on the economy this week.

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