President Cyril Ramphosa has given the strongest indication to date that he wants the independence of the country’s central bank protected, and he is ready to defend it.
"I was one of those who participated in the crafting of the clause that deals with the Reserve Bank in our Constitution, and can confirm and testify that to me that remains an unassailable provision in our Constitution," Ramaphosa said.
The ANC took a controversial decision to nationalise the South African Reserve Bank (SARB) at its December conference that elected Ramaphosa president of the party.
However, the party delayed a parliamentary debate on full state ownership of the bank in March, when it withdrew a motion on the issue to "allow for more consultation within and with other stakeholders".
The country’s Reserve Bank has private shareholders and the ANC has argued that the current ownership is a "historical anomaly", despite shareholders not having a say on monetary policy.
Ramaphosa initially tried to avoid the question of when the ANC resolution would be implemented, saying he had only been in office for a few months.
However, when pressed on the matter, he was emphatic that the role of the bank must remain independent of the state if the country wanted to modernise the economy.
"The Reserve Bank should be an independent entity to be in charge of managing our monetary policy. As government, we should focus on the fiscal side, and trust our Reserve Bank to manage the protection, the efficacy and defence of our currency," Ramaphosa said.
He was speaking at his first engagement with the members of the South African National Editors’ Forum (SANEF) at Tuynhuys, the Cape Town office of the Presidency near Parliament. He was responding to a question on the dire impact on the Turkish lira after President Recep Tayyip Erdogan was repeatedly quoted opposing any move to raise interest rates. Erdogan referred to this as the "mother of all evils", while investors and economists argued it was the only way out of the country’s economic rout.
The lira’s performance has a direct impact on the performance of the rand, as both South Africa and Turkey are emerging markets.
"We appoint well-minded, clever people to at helm of an important institution like [the] Reserve Bank – that is what I sign off on," Ramaphosa said.
"It is important, when we want to run a modern economy, to show [that] the institutions that manage your economic fortunes, like [the] central bank, are given the independence that they should have," he added.
SARB has said attempts to nationalise it would be a "cosmetic exercise" which would be damaging and costly.
Ramaphosa is pushing on with his ambitious investment drive to attract $100bn to bolster the weak economy.
He said the World Economic Forum had committed to sending 100 investors to the country for a round table to help his plans. They were also looking at countries in Africa and the Middle East where they could invest their pension funds, he said.
Ramaphosa has plans to hold both a job and an investment summit later this year.
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