Johannesburg – The South African Reserve Bank (SARB) is expected to present its arguments to have the Public Protector’s remedial action set aside.
The matter will be heard at the North Gauteng High Court in Pretoria on Tuesday.
In a report released by Public Protector Busiswe Mkhwebane in June, she ordered the Reserve Bank’s constitutional mandate be changed. The report was based on the investigation on the Bankorp bailout during the apartheid era.
The SARB filed an urgent court application as the remedial action was unlawful and beyond Mkhwebane’s powers. Later Treasury, parliament and ABSA, which bought Bankorp, filed supporting affidavits.
The SARB challenged the report on several grounds. Among these being that it breached the separation of powers as it encroached on Parliament’s exclusive domain. The remedial action was also not related to the subject of the Public Protector’s investigation.
The SARB also pointed out that the remedial action was irrational and the process was unfair as the Reserve Bank was not given an opportunity to comment on the constitutional amendment.
Although the Public Protector chose not to oppose the SARB’s application, the bank still wants the decision to be confirmed in court, Kganyago told journalists after the bank’s annual general meeting on Friday.
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Kganyago said that protecting the value of the currency is a core function of central banks. “I know of no central bank that does not have this mandate. These institutions are best equipped to carry out this function, and stripping them of this mandate would raise the question as to where the responsibility for price stability should lie.”
He added that inflation targeting does not have a narrow focus which excludes employment and growth.
The SARB’s governor and deputy governors will also be briefing the Parliamentary Standing Committee on Finance (SCOF) in Parliament on Tuesday. Among the issues tackled include the Reserve Bank’s view on the economy, the independence of the central bank, and its annual report.
The bank’s Monetary Policy Committee (MPC) recently decided to cut interest rates 25 basis points to 6.75%. At the MPC announcement Kganyago asserted that the bank was not pressured to do so and that the bank remains independent.
“No president, past or present, no minister of finance, past or present had ever attempted to tell the SARB how to execute its mandate,” he said.
Further calls by the ANC to nationalize the bank would not impact its mandate, he said.
On Monday, market analysts at TreasuryOne said that the latest report by Moody’s warning of political pressure on the bank saw the rand come under pressure. The local unit opened at R12.98/$ on Monday and had declined to R13.17 by the opening on Tuesday.
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