In an open letter on Tuesday, published to his Facebook account, Finance Minister Tito Mboweni says he is getting “exasperated” with the continued attacks on and obsession with the SA Reserve Bank.
Although he didn’t say it outright, most of what he has criticised has been driven by the “radical economic transformation” faction in his own party, the ANC, led by Magashule.
Mboweni’s post, which has already elicited hundreds of comments and thousands of reactions on social media, enjoined South Africans to leave the central bank to do its important job in peace while the finance ministry got on with the job of running the economy.
Mboweni added that the focus needed to be on growing the economy through “micro-economic restructuring”.
The minister warned against the culture that is currently fashionable among some in the ANC, and other “radical” parties, of blaming the private sector for South Africa’s ongoing problems.
“Let us stop shouting at business and embrace them as partners in economic growth, investment and job creation,” he wrote.
He added that all farmers, including white ones, were important to grow the agricultural sector and create jobs, and farmers needed to be embraced. He has been a farmer in Tzaneen himself.
The ANC’s economic transformation head, Enoch Godongwana, had earlier also contradicted Magashule’s public statements on the ANC’s stance about the Reserve Bank.
Godongwana issued a statement on Tuesday night saying the ruling party had not taken a decision to expand the mandate of the SA Reserve Bank, despite Magashule telling the media that afternoon that the ANC national executive committee had decided at its lekgotla this weekend that the bank should go beyond ensuring price stability and managing inflation and include growth and employment.
Magashule also claimed the party was thinking of constituting a task team to explore quantitative easing at the bank. Godongwana said this was not accurate, echoing Mboweni’s view that the finance minster and the Reserve Bank governor would “continue to assess our economic performance and coordinate macroeconomic policy in the interest of balance and sustainable economic growth”.
The ANC therefore appears completely at odds with itself, which analysts are calling “disastrous” from a policy perspective.
Godongwana said on Tuesday night: “There is no decision to expand [the Reserve Bank’s] mandate.”
Read Mboweni’s full letter, slightly edited, below:
WHAT IS THIS OBSESSION WITH THE SOUTH AFRICAN RESERVE BANK?
1) I am now reaching a point of total exasperation with this continued attacks and obsession with the South African Reserve Bank.
2) I have explained on many occasions the purposes and functions of the South African serve 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.
3) Here is the economic policy architecture:
3.1) The Constitution says that the mandate of the South African Reserve Bank is to “protect the value of the currency in the interests of balanced and sustainable growth in the republic”.
3.2) Then there is this: the South African Reserve Bank operates independently without fear, favour or prejudice, provided that there is regular consultation with the Minister of Finance. Done.
3.3) Read carefully. The PFMA clarifies the role of the Minister of Finance and the National Treasury. I quote IN EXTENSO: “Section 5: Establishment: 1) A National Treasury is hereby established, consisting of , a) the Minister, who is the Head of the (National) Treasury; and 2) The Minister, as the Head of the National Treasury, takes the policy and other decisions of the (National) Treasury, except those decisions taken as a result of a delegation or instruction in terms of Section 10.”
3.4) Further in the FUNDAMENTALLY critical Section 6, the PFMA says: “ FUNCTIONS AND POWERS-
1) The National Treasury must
a) promote the national government’s fiscal policy framework and the coordination of macroeconomic policy
b) coordinate inter-governmental financial and fiscal relations.”
4) The point that is normally missed in the public conversations is that in LAW, the Minister of Finance is actually, in terms of section 6 of the PFMA responsible for the coordination of macroeconomic policy in the whole government. It is a very serious matter. In fact, correctly put it is the Ministry of Finance and Economic Coordination by Law.
5) NOW THEREFORE,
5.1) Let us leave the South African Reserve Bank alone to pursue its mandate without fear, favour or prejudice,
5.2) Let us focus on micro-economic restructuring to grow the economy,
5.3) Let us stop shouting at business and embrace them as partners in economic growth, investment and job creation,
5.4) Let us embrace ALL farmers, black and white, to grow our agriculture. Last year agricultural exports were at about $11 billion. Jobs right there.
6) I rest my case.
4 June 2019