Don't mess with the Reserve Bank

Pravin Gordhan, the minister of finance, called for a halt this week to speculation about the role and independence of the South African Reserve Bank.

Speaking to Business Times from Davos, where he attended the World Economic Forum with President Jacob Zuma, Gordhan said there was no room for discussion outside "the context of the constitution".

He said the main questions he was getting from government and business leaders at the forum were about the thinking and policies of the "new" government.

But he said he had not had a single question about the future status of the central bank on the sidelines of the WEF.

"This scepticism about either the independence of our bank or the importance of its role must be dismissed completely," he said.


"In the tradition of our country, the central bank's independence is assured. The independence of the central bank is well understood and well established."

Cosatu has accused the Bank of "sabotaging" the government's economic recovery programme by keeping rates on hold this week and renewed its call for it to be nationalised.

"Is it not a coincidence that month after month, the Bank pursues policies that reflect the views of particularly the financial sector leaders and their 'expert' commentators, rather than those of the majority of South Africans," Cosatu said.

Gill Marcus, the Governor of the Reserve Bank, said after this week's rate decision that a task team was looking at the inflation-targeting framework. "What we have to say about any of these matters will come in the budget speech," she said.

Gordhan, who delivers his budget on February 17, said the appetite for investment in South Africa was still high and world leaders were still keen to discuss global issues with the country's leaders.

"President Zuma made quite an impact here in the plenary sessions with his frankness, with his call that the developed world must rethink the way in which it is operating and, more importantly, that the developing country voices need to be not just heard, but acknowledged," he said.

"I don't want to overstate the case, but we still have a very important presence."

He said there was a sense among world economists that emerging markets could be the drivers of a recovery. "We have to position ourselves to capitalise on that hope," Gordhan added.

Source: Times Live