Cyril Ramaphosa reaffirms mandate of central bank

President Cyril Ramaphosa has reaffirmed the constitutional mandate of the central bank.
President Cyril Ramaphosa has reaffirmed the constitutional mandate of the central bank.
Image: Esa Alexander

President Cyril Ramaphosa has reaffirmed the constitutional mandate of the SA Reserve Bank, but cautioned that the Bank's mandate of only prioritising price stability was not sufficient to stimulate economic growth.

"The South African Reserve Bank is a critical institution of our democracy, enjoying wide credibility and standing within the country and internationally.

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"Price stability is a necessary but not a sufficient condition for economic growth," said Ramaphosa while delivering his state of the nation address on Thursday evening.

He said rising prices of goods and services were reducing the purchasing power of all South Africans, especially the poor.

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"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.

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

"Our constitution also requires that there should be regular consultation between the Reserve Bank and the minister of finance to promote macroeconomic coordination, all in the interests of employment creation and economic growth," he said.

Early this month ANC leaders had a public fallout over the mandate of the Reserve Bank, a spat which resulted in the value of the rand tumbling against major international currencies.

ANC secretary general Ace Magashule butted heads with the party's economic transformation head Enoch Godongwana and finance minister Tito Mboweni when Magashule told a media briefing that the ANC NEC lekgotla had resolved to expand the mandate of the central bank. Magashule's assertion was disputed by Godongwana while Mboweni warned him to stop obsessing about the central bank.

However, Ramaphosa weighed in, and said the governing party's stance on the central bank has not changed.

"The constitution ... sets the role of the Reserve Bank as protecting 'the value of the currency in the interest of balanced and sustainable economic growth.' It further states that this mandate must be exercised in regular consultation with government, through the cabinet minister responsible for national financial matters. This policy has not changed.

"It is our desire for the SA Reserve Bank to be publicly owned. However, we recognise that this will come at a cost which, given our current economic and fiscal situation, is simply not prudent," said Ramaphosa two weeks again.

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