South Africa Ombudsman Can't Change Central Bank Mandate, Gigaba SaysBy
Finance minister insists on central bank independence
Absa asks court to join the Reserve Bank’s application
South Africa’s graft ombudsman doesn’t have the power to change the central bank’s mandate, Finance Minister Malusi Gigaba said.
“Treasury is engaging with the Public Protector’s office to understand the recommendation to change the Reserve Bank’s mandate,” Gigaba said in a speech in Johannesburg on Friday. “It is my view that the Public Protector does not have the power to amend the Reserve Bank’s mandate.”
Public Protector Busisiwe Mkhwebane in a report earlier this month instructed parliament to start a process to amend the nation’s constitution to make the central bank focus on the “socioeconomic well-being of the citizens” rather than inflation. Her comments knocked the rand as the change was seen by investors as a threat to the independence of the Reserve Bank.
The central bank has filed court papers to reverse Mkhwebane’s instruction that its mandate of protecting the value of currency be changed, saying she exceeded her powers and the “reckless” proposal is harming the economy. The papers list Mkhwebane, the speaker of parliament, the chairman of the portfolio committee on justice, the Special Investigative Unit, Absa Bank Ltd. and the National Treasury as respondents. They have until Friday to indicate if they will oppose the Reserve Bank’s application.
Barclays Africa Group Ltd., which owns Absa, asked the court on Friday to be made a co-applicant in the central bank’s case. The Public Protector’s report and instructions followed after an investigation into an apartheid-era bailout by the regulator of Bankorp, which Absa bought in 1992.
Mkhwebane went beyond her mandate and shouldn’t have challenged the objective of the Reserve Bank, African National Congress Treasurer General Zweli Mkhize said at the ruling party’s policy conference in Johannesburg Friday.
The Constitutional Court ruled last year that the Public Protector’s instructions are binding. The Treasury is discussing the issue with the Public Protector’s office to understand the recommendation to change the central bank’s mandate, Gigaba, who was speaking at the policy conference, said.
“This is an important matter as there is a court ruling that the Public Protector’s recommendations are binding,” he said “No one should panic. We should all insist on the independence of the Reserve Bank.”
— With assistance by Vernon Wessels