The governor of the Reserve Bank
A court battle is looming between the South African Reserve Bank and the public protector as the bank seeks an urgent review of the remedial action to amend the Constitution to change the Reserve Bank’s mandate.
Busisiwe Mkhwebane on Monday announced the recommendation, which came out of the Ciex investigation linked to the Absa bailout.
The Reserve Bank’s legal team has advised that Mkhwebane’s instruction that a process be initiated in Parliament for constitutional amendments is “unlawful” and it “falls outside her powers”.
“The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency and the well-understood role that central banks play in securing price stability. The remedial action proposed will have a negative impact on the independence of the Reserve Bank,” the bank said in a statement.
After investigating Absa bank, the Reserve Bank and the government for an apartheid-era bailout, the public protector found Absa “unduly benefitted” to the tune of R1.125-billion. The report found that both the government and the Reserve Bank had been inconsistent with the Constitution in their conduct.
Mkhwebane said in her remedial action that the justice and correctional services portfolio committee must begin a process to amend the Constitution so that the Reserve Bank’s mandate is altered to sustaining economic growth and ensuring citizens’ economic well-being is protected.
On Monday evening Reserve Bank governor Lesetja Kganyago delivered the keynote address at the Centre for Education and took the opportunity to respond to Mkhwebane’s recommendations.
“We will continue to honour our constitutional mandate and the trust placed in us by the South African society,” he said.
Kganyago disagreed with Mkhwebane’s remedial action, saying that the bank’s mandate already focuses on sustaining economic growth. Inflation targeting, he said, is necessary in the current economic climate andfor it to be achieved, the bank’s central mandate must remain constant.
Mkhwebane has not yet responded to claims that she overstepped her powers by instructing that amendments be made to the Constitution. The public protector’s remedial action is binding unless it is successfully challenged by court review and set aside. There are, however, remedial actions that serve as recommendations and are not considered binding.
The Reserve Bank says it will file papers to have the remedial action set aside in urgent proceedings to review the public protector’s recommendations.
But it is not only the remedial action the bank has found erroneous; it is also accusing the public protector report on the Absa bailout of containing “factual inaccuracies” regarding evidence.
“The Reserve Bank will address its other concerns with the report and evidential factual inaccuracies therein, at the appropriate time,” the bank said.