Bring haves and have-nots together

Patel, the minister of economic development, believes workers and bosses can agree on a package of productivity, wage restraint and price moderation. Gordhan, the minister of finance, believes new money and old can be persuaded to consume less conspicuously and stop looting the public purse.

The new growth path framework tabled in parliament on Tuesday will test the optimism of the minister of economic development, who will run it, and the minister of finance, who will fund it, because it presumes a national conversation that will quickly deliver a consensus on how to take the country forward to common prosperity, even at the cost of some personal profit.

Gordhan will not fix rand exchange rate

The Reserve Bank is still engaging in the foreign exchange market by buying reserves, but more direct intervention by fixing the exchange rate is not on the cards.

The bank said on Friday its gross gold and foreign exchange reserves increased by $131-million to $44.2-billion in October.

The international liquidity position, or net reserves, grew by $2.3-billion to $43.1-billion, largely reflecting the bank's activity in the market.

Gordhan defends SA’s inflation-targeting and flexible exchange-rate regimes

According to Reuters, Finance Minister Pravin Gordhan yesterday defended the South Africa’s inflation-targeting framework in a written statement to parliament. Gordhan said “Our inflation-targeting framework has proved itself in the past as a valuable signal for credible policy”, saying that it provided investors with “confidence in times of crisis” and “flexibility for the Reserve Bank to respond appropriately during a crisis”.

The minister also reiterated the country’s desire to maintain a flexible exchange-rate stance, saying “The flexible exchange rate also acts as a buffer against shocks and helps to reduce the volatility of interest rates”. Alluding to the fiscal debt problems in Europe, Gordhan said that policymakers would remain “committed to managing risks in an uncertain global environment that included fiscal problems in some European countries”, while at the same time remaining “committed to maintaining macroeconomic and financial stability through supportive and responsible fiscal and monetary policy”.

2010 Budget Speech: Monetary policy and the exchange rate

Excerpt from 2010 National Budget Speech: Monetary policy and the exchange rate

Mister Speaker, monetary and exchange rate considerations are also important elements both in adapting to global developments and in creating an environment supportive of growth and employment creation.

Let us remind ourselves about what Section 224 (1) of the Constitution says about the mandate of the Reserve Bank:

The primary objective of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic.

As required by the Constitution, the Bank should pursue its mandate independently and without fear, favour or prejudice. The Governor and I will consult regularly to ensure that South Africa is prepared to respond with agility and flexibility to changing economic circumstances.

COSATU welcomes Minister’s pledge to address inflation targeting

The Congress of South African Trade Unions welcomes Finance Minister Pravin Gordhan’s commitment to address the South African Reserve Bank’s inflation targeting policy when he unveils the national budget.

He said: “We are talking, working, thinking, reflecting, interacting with the key stakeholders from within the government and listening to the voices from outside and will inform South Africa where we intend to go on February 17th”.

COSATU and its allies have argued strongly for a change in the SARB’s mandate, so that its Monetary Policy Committee has to take regard of broader national priorities – particularly economic growth and job creation – rather that a narrow concern only with inflation targeting.

This policy has resulted in excessively high interest rates over a long period, which has imposed unnecessarily heavy burdens on both individual consumers and businesses, and caused thousands of workers to lose their jobs.

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.