Public Protector wants to change Constitution on Reserve Bank

FILE: Public Protector Busisiwe Mkhwebane announced on Monday she wants the Reserve Bank's mandate to change. Photo: Gallo Images / Sunday Times / Moeletsi Mabe

JOHANNESBURG - The Public Protector set her sights on the South African Reserve Bank (Sarb) yesterday.

Busisiwe Mkhwebane released the outcomes of several investigations her office conducted over the past few months. 

In the wake of a report on an apartheid-era loan, Mkhwebane said Parliament should amend the Constitution to change the primary focus of the bank.

The Public Protector told journalists that Section 224.1 of the Constitution should state that the main aim of the Reserve Bank was to promote balanced and sustainable economic growth, while ensuring that the socio-economic well-being of citizens was protected.

Currently, the Sarb's primary aim was to protect the value of the rand in the interests of balanced and sustainable growth, a key factor in inflation-targeting

Mkhwebane also wanted regular consultation between the bank and Parliament, and not Treasury, as was currently the case.

It would take a two-thirds majority in Parliament to amend the law. 

The rand weakened on the back of Mkhwebane's announcement, to just above $13.

There were also fears the Public Protector's comments could contribute to policy uncertainty, with the Sarb cited by ratings agencies as a beacon of strength. 

Speaking at a banquet in Johannesburg on Monday night, Sarb governor Lesetja Kganyago hit back, accusing those who pretended that high inflation resulted in sustainable growth of macroeconomic populism, which he said was usually a precursor to misery.

"If we can keep inflation lower, anchoring inflation expectations, that should in turn generate a lower rate of interest to support the economy," Kganyago said.

Additional reporting Reuters

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