Mboweni’s ‘total exasperation’ at Reserve Bank obsession

Staff Writer | Jun 06, 2019
In an open letter, Finance Minister Tito Mboweni has urged South Africans to ‘leave the South African Reserve Bank alone’, to ‘stop shouting at business and embrace them as partners’ and to ‘embrace all farmers, black and white, to grow our agriculture’.

In what is being widely regarded as a repudiation of the ‘radical economic transformation’ faction in the governing African National Congress (ANC), Mboweni has bluntly rejected meddling with the South African Reserve Bank (SARB), and urged a collaborative approach to business and farming. 

With undisguised irritation, he wrote in his open letter, published on his Facebook account: ‘I am now reaching a point of total exasperation with [these] continued attacks and obsession with the South African Reserve Bank. I have explained on many occasions the purposes and functions of the South African [Reserve] Bank. What is the issue? What is the problem you want to solve? You blame the reserve bank for everything. Water, unemployment, electricity, growth … No people, no.’

Mboweni’s intervention follows a statement on Tuesday afternoon by ANC secretary general and acknowledged hardliner Ace Magashule that ‘the ANC NEC lekgotla agreed to expand the mandate of the SA Reserve Bank beyond price stability to include growth and employment’.   

This was promptly contradicted by ANC economic transformation head Enoch Godongwana, who said the ruling party had not taken a decision to expand the mandate of the SARB.

In his brisk response, Mboweni said: ‘Let us leave the South African Reserve Bank alone to pursue its mandate without fear, favour or prejudice.’ He spelled out the ‘economic policy architecture’ governing the SARB in some detail. 

Going beyond the immediate issue of the SARB, Mboweni added: ‘Let us focus on micro-economic restructuring to grow the economy. Let us stop shouting at business and embrace them as partners in economic growth, investment and job creation. Let us embrace ALL farmers, black and white, to grow our agriculture. Last year agricultural exports were at about $11 billion. Jobs right there. I rest my case.’

Mboweni pointed out that the Constitution provided that the mandate of the SARB was ‘to “protect the value of the currency in the interests of balanced and sustainable growth in the republic”’ and that the bank ‘operates independently without fear, favour or prejudice, provided that there is regular consultation with the Minister of Finance. Done.’

Signs of tension within the ANC on key economic policy issues comes on the heels of the announcement on Tuesday of South Africa’s worst GDP fall since 2009, and, in May, confirmation of a first quarter rise in joblessness, now at 27.6% 

IRR analysts warned yesterday that without significant policy reforms, economic recovery would elude South Africa. 

 

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