Ramaphosa comes out against expanding Reserve Bank mandate

The logo of the South African Reserve Bank
The logo of the South African Reserve Bank

President Cyril Ramaphosa came out strongly in support of the SA Reserve's Bank original mandate on Thursday. 

Ramaphosa was speaking two weeks after ANC secretary general Ace Magashule said the NEC - the ANC's highest decision making body between conferences - had agreed that the central bank's mandate should be expanded beyond price stability to make it an active agent in economic transformation and job creation.

Magashule's announcement caused confusion and elicited a rebuke from Finance Minister Tito Mbwoeni, who in a Twitter post at the time wrote that he was reaching a point of "total exasperation with [...] continued attacks and obsession with the South African Reserve Bank". Reserve Bank governor Lesetja Kganyago, meanwhile, described the situation as the arrival of the "barbarians at the gate of SARB".

As uncertainty mounted, putting pressure on the rand, Ramaphosa decided to intervene. He put out a statement on June 6 saying the spat was "not helpful" and the mandate of the central bank had not changed. 

'Price stability' 

On Thursday in his State of the Nation address Ramaphosa continued in the same vein, saying price stability was the bank's key mandate.

"Rising prices of goods and services erode the purchasing power of all South Africans, but especially that of the poor. Inflation further undermines the competitiveness of our exports and our import-competing firms, putting industries and jobs at risk. For these reasons, our Constitution mandates the South African Reserve Bank to protect the value of our currency in the interest of balanced and sustainable growth," he said. 

"Today we reaffirm this constitutional mandate, which the Reserve Bank must pursue independently, without fear, favour or prejudice."

He added that the Constitution also requires that there should be "regular consultation" between the Reserve Bank and the Minister of Finance to promote macroeconomic coordination, in the interests of employment creation and economic growth.

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