Kganyago describes expansion of central bank mandate as ‘noise’

South African Reserve Bank (SARB) governor, Lesetja Kganyago has described the arguments regarding the mandate of the central bank as ‘noise’.

Speaking at a Legae Presec BoldTalk event on Friday Kganyago once again maintained his stance regarding the expansion of the SARB mandate.

Kganyago said that the current debate is characterised by people conflating the bank’s mandate with other issues.

“They are conflating ownership with the mandate of the bank. The mandate of the bank is spelt out in the Constitution of the Republic. Also, they confuse it with independence and that independence is also spelt out in the constitution,” he said.

His comments come after a public spat between Finance Minister Tito Mboweni and ANC secretary general Ace Magashule after Magashule told journalists last month that the party’s national executive committee (NEC) lekgotla had resolved to expand the mandate of the bank to include growth and employment.

Magashule said that the NEC had further considered setting up a task team to explore “quantity [sic] easing” to address the country’s developmental needs and boost the economy.

In a series of tweets, Mboweni slammed Magshule’s statements saying that the government would be the one to set the mandate for the reserve bank.

The rand plunged by nearly 5% in early June reaching a high of R15.10 following the tussle between the senior ANC members adding to the already depressed economy.

During the talk on Friday, Kganyago said that the debates around the SARB have turned into ‘zombie discussion’ that keeps coming back despite the facts.

“I don’t think that the Constitution has to be changed for the reserve bank to have a view on growth,” he says.

“You can’t target employment, you can target growth. Employment is an outcome of growth. When this economy was growing at 5.5% employment was growing,” he added.

When quizzed on the role of monetary policy on the country’s GDP which contracted by 3.2% earlier this year, Kganyago said, “The contraction in the first quarter of this year had nothing to do with monetary policy. It had to do with electricity constraints. It had to do with strikes in the mining sector. You are not going to solve strikes or electricity constraints using monetary policy.”

On Thursday, Kganyago and Mboweni released a joint statement reiterating that the Finance department supports the independence of the central bank, adding that the National Treasury would not interfere “in monetary policy decision making or decisions of the SARB.”

“The SARB does not comment on fiscal and policy matters,” the statement read.

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Thando Maeko
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian

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