Cape Town – President Cyril Ramaphosa says there are no plans to change the South African Reserve Bank’s (SARB) mandate to include a focus on job creation.
Ramaphosa said that the central bank cannot address economic growth and unemployment solely through accommodating monetary policy but that structural factors must also be considered.
Responding to a question from an ANC MP Phumulo Masualle on Thursday in the National Assembly for the last time this year., Ramaphosa defended the SARB’s current approach, saying that there was no need to deviate from its current course.
“While the reserve bank should, without sacrificing price stability, take into account broader objectives such as employment creation and economic growth, there is therefore currently no intention to review the mandate of the SA Reserve Bank,” Ramaphosa said.
He also supported the SARB’s inflation targeting, noting that other countries employ similar policies, and stressed the importance of allowing the SARB to pursue its primary objective of protecting the currency impartially.
Honourable Members,
The mandate of the South African Reserve Bank is set out in section 224 of the Constitution, which states that the primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic… https://t.co/iHTYE5j5nE
— Cyril Ramaphosa 🇿🇦 (@CyrilRamaphosa) November 2, 2023
“It should be known that we are not the only country in the world that has an inflation-targeting policy approach,” he said.
Ramaphosa said that the SARB’s mandate was rooted in the country’s constitution, with its primary role being the preservation of South Africa’s currency. He reiterated that there were no plans to reconsider the bank’s mandate, emphasising the importance of allowing it to operate independently and without external interference.
“South Africa faces structural growth and employment problems which [can’t] be addressed by a mere accommodative monetary policy stance. We need to focus on the structural factors constraining our economy,” he said.
He cautioned against tampering with the constitution and other legal frameworks to alter the bank’s mandate, highlighting that the bank’s functions were crucial for maintaining economic stability.
“Section 224 of our constitution sets out the clear objectives of the central bank and if one looks at the section carefully, you will find that once it addresses the value of our currency, it has to be looked at in a broader context.
“We need to use all the instruments at our disposal. The macroeconomic policies of our country need to be used, fiscal and monetary, to foster growth. The focus on the value of our currency is not a matter to look at in isolation. It needs to be looked at as part of the whole,” said Ramaphosa.
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Compiled by Betha Madhomu
