Nov. 15 (Bloomberg) -- South Africa’s ruling African National Congress agreed with its labor union and Communist Party allies that the mandate of the central bank must be reviewed and broadened.

“In view of the current economic crisis, we can’t just say the mandate is right as is,” ANC Secretary-General Gwede Mantashe told reporters in Johannesburg today. The ANC and its alliance partners -- the Congress of South African Trade Unions and South African Communist Party -- ended a three-day summit in Johannesburg today.

Cosatu, which helped propel President Jacob Zuma to power in May, has been lobbying the government to review its inflation-targeting policy, which it says is prolonging the economy’s first recession in 17 years and failing to stem job losses. The government has set an inflation target of 3 to 6 percent and Finance Minister Pravin Gordhan said Oct. 13 that the policy will be retained.

The ANC and its allies discussed “how best the Reserve Bank should talk to the development priorities of the state,” Mantashe said. “The summit agreed that the alliance task team on macroeconomic policy must remain seized with reviewing and broadening the mandate of the Reserve Bank.” Mantashe did not outline specific measures.

Clash

Labor unions clashed with former central bank Governor Tito Mboweni, who raised the benchmark interest rate 10 times to 12 percent in the two years through June 2008. The rate has been cut by 5 percentage points since December. Gill Marcus, who replaced Mboweni on Nov. 9, will probably keep the rate unchanged on Nov. 17, according to 21 out of 23 economists surveyed by Bloomberg.

The ANC has ruled South Africa in alliance with Cosatu and the South African Communist Party since all-race elections in 1994. The unions have been pushing for a greater say over policy since helping Zuma win leadership of the ANC in December 2007 and former President Thabo Mbeki was ousted in September last year.

South Africa’s economy, the biggest on the continent, shed 484,000 jobs in the third quarter, pushing up the unemployment rate to 24.5 percent, the highest of 62 countries tracked by Bloomberg. Simmer & Jack Mines Ltd., a gold producer, said on Aug. 31 it may cut almost half the jobs at its biggest mine as the rand’s appreciation cut profits.

The ANC and its allies will also consider the strong rand, which may be undermining the economy’s recovery, Mantashe said. The rand has gained 28 percent against the dollar this year.

Exchange Rate

“The exchange rate is important for the economy,” Mantashe said. “If the exchange rate is at a level that is encouraging imports, it’s deepening the economic crisis for sure.”

Mantashe said the alliance also opposed tariff increases proposed by Eskom Holdings Ltd., the state-owned power utility, as it may damage economic growth and result in job losses. Eskom applied last month to raise power prices by 45 percent a year over the next three years.

“We are uncomfortable with 45 percent increase over three consecutive years,” Mantashe said. “It will impact negatively on society, the economy and jobs.” The “summit therefore supported efforts to have the tariff increases minimized.”

Cosatu eased its opposition to the National Planning Commission led by former Finance Minister Trevor Manuel, agreeing today with the ANC that the commission should continue to be located within the Presidency and be headed by Manuel. Zuma named Manuel as head of the National Planning Commission in May, a move opposed by the unions who said that the commission will give Manuel too much influence over government policy.

“It’s no more an issue” of who should lead the commission, Cosatu President Sidumo Dlamini told reporters. “The issue is how to ensure the commission discharges its duties with the utmost speed required.”

To contact the reporter responsible for this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net.

Last Updated: November 15, 2009 13:39 EST