ANC mandate on SA Reserve Bank

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SABC News

SABC News

5 жыл бұрын

ANC officials have been openly clashing over the issue of South Africa's central bank, the Reserve Bank.
And it's an important issue because perceived threats to the independence of the Reserve Bank have already affected the Rand and could affect levels of investment in South Africa.
The issue is quite technical.
Currently the Reserve Bank targets the level of the Rand.
An example is that when the Rand is weak the Reserve Bank may raise interest rates which makes South African investments more attractive to encourage foreigners to trade in the Rand and cause it to strengthen.
This in turn helps inflation or the rate at which prices are rising.
If the Rand is very weak, imported goods can become very expensive and push up prices across the economy.
So the Reserve Bank's mandate, according to the constitution, is to keep prices stable.
This is often says helps the economy because runaway inflation - as we saw in Zimababwe - could be dire and make many goods unaffordable.
But there's another view that the Reserve Bank could try help South African consumers by keeping rates low and that in turn will stimulate the economy.
The open divide was visible after the ANC's secretary general, Ace Magashule, told journalists yesterday the party had decided at the National Executive Committee lekgotla at the weekend to expand the bank's mandate in order to ease South Africa's poverty and unemployment.
That has been slammed by the Finance Minister, Tito Mboweni, who said it was a reckless statement that could hurt the economy.
And the ANC Head of Economic Transformation, Enoch Godongwana, has directly contracted Magashule saying the ANC took a decision not to interfere with the mandate of the central bank.
Godongwana joins us in studio now.
For more news, visit: sabcnews.com

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