Concerns Raised On ANC’s Reserve Bank Comments

The South African Reserve Bank building

As the South African Reserve Bank (Sarb) prepares to announce its decision on the repo rate on Thursday afternoon, concerns have been raised around the African National Congress’ (ANC) recent comments on the central bank.

In November the repo rate was increased by 25 basis points to 6.75% with governor Lesetja Kganyago listing rising inflation and the weak rand as major factors.

During the party’s manifesto launch in Durban last weekend, the ANC said the bank should broaden its focus to boost employment and economic growth.

Economist Lebohang Pheko says: “Because of electioneering, there is probably some pressure to make decisions that are popular or likable. A decision that annoys the least number of consumers or voters. It comes on the back of ongoing discussions on role of South African Reserve Bank.”

On Wednesday, however, President Cyril Ramaphosa said the party had no intent to tinker with the independence of the SA Reserve Bank.

The South African central bank’s mandate now focuses on price stability, but the ANC said in its 2019 election manifesto that monetary policy should also “take into account other objectives, such as employment creation and economic growth”.

On Wednesday, Ramaphosa said, “There is no intention whatsoever to tamper or tinker with the independence of the central bank.

“The issue that is expressed is that as it goes ahead with its monetary policy machinations and policy decisions, it should also keep an eye on the issue of employment.”

The central bank guards its independence and has opposed attempts to alter its mandate, which is enshrined in the Constitution.

The Reserve Bank has yet to comment on the ANC’s remarks in the manifesto released on Saturday.

“The governing party is essentially saying we have got a burning platform with regard to employment, and we would like everyone to focus on the creation of jobs. Clearly, there is nothing wrong with that,” Ramaphosa added.