Nationalising the Reserve Bank is “simply not prudent”, President Cyril Ramaphosa said in a statement on Thursday, after a meeting with the ANC’s top six officials.
The statement, issued by the Presidency at Luthuli House, said the public spat between senior officials — including secretary general Ace Magashule and Finance Minister Tito Mboweni — over the mandate of the Reserve Bank was not “helpful”.
The officials, including Magashule, stepped back from the statement the secretary general issued on a review of the mandate of the central bank on Tuesday which led to the row. The top six have since indicated that the governing party will stick to its policy position on the independence and role of the central bank as set out in the Constitution.
“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 through the cabinet minister responsible for national financial matters. This policy has not changed,” the statement said.
“It is our desire for the South African Reserve bank to be publicly owned. However, we recognize that this will come at a cost, which given our current economic and fiscal situation, is simply not prudent.”
The spat, in which Magashule announced a review of the mandate and mooted the possibility of quantitative easing to tackle intergovernmental debt, resulted in the rand taking a knock and jitters in the market. Quantitative easing is a way for central banks to boost a struggling economy, through among other things, printing money to bolster demand.
“In the context of the above, the Officials viewed the recent public spats about the mandate of the SA Reserve Bank as not being helpful, and mitigating and undermining the confidence of citizens and of investors,” the statement signed off by President Cyril Ramaphosa said.
The top six met to discuss the state of the economy, given the 3.2% contraction in the economy announced by Statistics South Africa on Tuesday, the sharpest decline in a decade.
“This serious state of affairs reaffirms the observations of the ANC lekgotla held from 1-3 June 2019, that we need to seriously tackle the challenges facing South Africa together and with a sense of urgency and unity of purpose.
“The NEC [national executive committee] lekgotla, which focused on apex priorities for the implementation of the ANC Manifesto, saw the growing of an inclusive economy and building state capacity as key,” the statement read.
The main decisions on the economy from the lekgotla refers to “apex priorities”. These include “a re-imagined Industrial strategy to grow jobs and participation in key sectors; urgently addressing the integrated energy mix, energy security and particularly Eskom; speeding up infrastructure development programmes, including water, ports, rail and rural roads; strengthening initiatives to decisively tackle youth unemployment; an inclusive financial sector, a stable and supportive macro-economic framework to grow and develop the economy.”
Ramaphosa added that there was “broad agreement” that all viable legal and other policy instruments should be used to ensure that the ANC got the economy growing again to create jobs and realise its manifesto programmes.