WEDNESDAY, 1.00PM:
CRITICISM of the South African Reserve Bank has been rejected by its governor, Chris Stals, who pointed out that any “attacks on its independence” are likely to provoke a negative response from international investors.
Speaking to Reuters, Stals said: “Very serious attacks have been made on the Reserve Bank … that transactions entered into in the past were illegal and that … taxpayers’ money was used and should be recoverable … It is nonsense.”
Stals is due to retire in a year’s time, and already the issue of his successor’s independence is a concern in investor circles. That successor will be chosen by the President, most likely Thabo Mbeki, due to succeed President Nelson Mandela next year.
The Reserve Bank’s independence is written into the Constitution, and it has wide discretion in its task of defending the national currency, but Stals’s methods have drawn fire from those who believe he has held interest rates too high, at the expense of growth and jobs. Stals’s priority has been low inflation, a target he has, to all intents and purposes, achieved.