South African central bank chief says mandate laid down by law
02 Aug 2017 - 0:39
Cape Town: South Africa’s central bank has a legal duty to fight inflation and keep the currency stable, its governor said yesterday, restating his opposition to proposals that would focus the mandate more narrowly on economic growth.
Lesetja Kganyago (pictured) also told a parliamentary committee that a separate proposal to nationalise the South African Reserve Bank (SARB) would not affect its mandate, as it would continue to derive its authority from the constitution.
He warned, however, that political turmoil and regulatory uncertainty were harming investor sentiment towards South Africa, the continent’s most industrialised economy. Public Protector Busisiwe Mkhwebane, whose job is to ensure proper conduct in public office, sparked a political row and a big sell-off in the rand currency when she proposed in June that the central bank’s monetary policy target be changed.
Kganyago has filed a court challenge to quash the recommendation, arguing that Mkhwebane went beyond the scope of her own mandate and describing the proposal as reckless.
“Suffice to say, we felt duty-bound by the constitution that when we felt that we were under attack, that we’ve got to stand up and defend this important institution of our democracy,” he said yesterday of Mkhwebane’s proposal. Mkhwebane said last month that she would not defend her recommendation in court and she was not represented at a hearing for the case that started in Johannesburg yesterday. A lawyer for the central bank, David Unterhalter, told the court the SARB acknowledged that Mkhwebane had conceded on the issue but said the potential consequences of the recommendation meant a court order was needed to reverse it.