UPDATE 2-South Africa's ANC says central bank should broaden economic focus

UPDATE 2-South Africa's ANC says central bank should broaden economic focus

Reuters  | Jan 12, 2019 12:50

UPDATE 2-South Africa's ANC says central bank should broaden economic focus

* Central bank mandate now focuses on price stability

* Ruling party wants to woo voters before May election

* Investors want central bank independence protected

* Policy uncertainty sparked recent South Africa recession (Recasts to focus on Reserve Bank comments)

By Siyabonga Sishi and Alexander Winning

DURBAN/JOHANNESBURG, Jan 12 (Reuters) - South Africa's ruling party said on Saturday the central bank should broaden its focus to include boosting employment and economic growth, a move that will worry investors already concerned about the direction of economic policy.

The African National Congress (ANC), which has governed South Africa since the end of apartheid in 1994 but has seen its majority wane, is trying to woo voters in the lead-up to a parliamentary election expected to take place in May.

The party led by President Cyril Ramaphosa wants to counter growing support for the radical leftist Economic Freedom Fighters, which wants the government to have a greater say in how the South African Reserve Bank (SARB) is managed.

The SARB's mandate now focuses on price stability, but the ANC said in its 2019 election manifesto released on Saturday that monetary policy should also "take into account other objectives such as employment creation and economic growth".

Past attempts to alter the SARB's mandate have caused the rand ZAR=D3 to weaken. The economy has only recently climbed out of recession triggered in part by investor worries about policies such as the ANC's plans to make the SARB fully state-owned and allow land expropriation without compensation.

"The ANC believes the South African Reserve Bank must pursue a flexible monetary policy regime, aligned with the objectives of the second phase of transition," the manifesto said, promising renewed efforts to tackle unemployment and racial inequalities. Godongwana, the chairman of the ANC's economic transformation committee, denied that the ANC was preparing to change the mandate of the SARB. told Reuters the manifesto merely reflected an intention for more coordination between monetary and fiscal authorities, adding "the independence of the Reserve Bank is sacrosanct".

The central bank guards its independence and has opposed attempts to alter its mandate, which is enshrined in the constitution. The bank did not respond to a request for comment.


The ANC is divided into two broad factions with divergent views on how the economy should be managed. One supports Ramaphosa's drive to boost private investment, while another loyal to his predecessor Jacob Zuma backs a strong state role.

Towards the end of Zuma's nine years in power, South Africa's anti-graft watchdog tried unsuccessfully to make the central bank promote economic growth rather than price stability.

In September, the ANC hastily retracted a statement calling on the SARB to do more to help the poor after an intervention by Godongwana, a member of Ramaphosa's faction. Attard Montalto, head of capital markets research at Intellidex, said the manifesto comments were a concern although he did not expect the SARB's mandate to change in the short term.

"The fact the manifesto specifically links the monetary policy committee's actions to the 'second phase of transition' is an explicit benchmarking of monetary policy against political aims," he said.

"It sets the SARB up for criticism in future as counter-revolutionaries and can further fuel the nationalisation debate," he added.

(Editing by Mark Heinrich and Edmund Blair)

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Canada) English (Australia) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Are you sure you want to sign out?
Saving Changes