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'No decision' to expand Reserve Bank mandate: Enoch Godongwana, despite Ace Magashule comment

ANC secretary-general Ace Magashule.
ANC secretary-general Ace Magashule.

The ANC’s economic transformation head, Enoch Godongwana, has contradicted party secretary-general Ace Magashule on the ANC’s stance on the mandate of the central bank.

Godongwana on Tuesday night issued a statement saying the ruling party had not taken a decision to expand the mandate of the SA Reserve Bank, despite Magashule having told the media that the ANC National Executive Committee (NEC) determined after its lekgotla at the weekend that the bank should go beyond price stability and include growth and employment.

Godongwana added that Magashule's comments that the party was considering constituting a task team to explore quantitative easing at the bank were "inaccurate".

Instead, Godongwana said, it was the finance minster and the Reserve Bank governor who would "continue to assess our economic performance and coordinate macroeconomic policy in the interest of balance and sustainable economic growth".

These mixed messages are expected to cause further policy uncertainty.

In terms of its mandate, the bank is required to achieve and maintain price stability in the interest of balanced and sustainable economic growth in SA. The ANC, at its elective conference in December 2017, resolved that the bank should be nationalised, but did not, at that stage, talk about the central bank’s mandate.

In its election manifesto in January, the party said monetary policy had to take employment and economic growth into account, but the ANC then insisted that it would not tinker with the central bank’s mandate.

Magashule said on Tuesday: “It was agreed that all deployees will ensure that resolutions of the 54th national conference be fully implemented. In this regard, the ANC NEC lekgotla agreed to expand the mandate of the SA Reserve Bank beyond price stability to include growth and employment.”

He said the NEC lekgotla also directed the ANC government to consider constituting a task-team to explore quantitative easing measures to address inter-governmental debts to make funds available for developmental purposes.

“These measures should consider the inflationary impact on the currency and the poor, and all must be done to cushion them. This is a consistent practice by developed countries to save their economies. This will go a long way in dealing decisively with the triple challenges of unemployment, poverty and inequality.”

But Godongwana said categorically on Tuesday night: "There is no decision to expand its mandate."

He said the constitution gave the Reserve Bank powers to protect the value of the currency "in the interest of balanced and sustainable economic growth". He added that former finance minister Pravin Gordhan wrote to the Reserve Bank in 2010 and told it to "take into account employment and growth".

"The debate about the mandate of the bank was therefore closed from that date," Godongwana said.

He continued that quantitative easing was a policy at the bank's disposal, which it could use when needed.

"The statement that suggests that the ANC is intending to set up a committee to investigate the need or otherwise for quantitative easing is inaccurate. In this regard the finance minister and the governor of the SARB will continue to assess our economic performance and coordinate macroeconomic policy in the interest of balance and sustainable economic growth.

"The matter is therefore closed," said Godongwana.

Finance minister Tito Mboweni also weighed in on Tuesday night, tweeting that it was government that "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'," he tweeted.

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