07 Jul

S.African watchdog defends bid to weaken central bank inflation mandate

South Africa’s main public watchdog stood by its bid to force the central bank to target growth rather than inflation, dismissing a legal challenge that the move was unconstitutional.

The head of the Public Protector Busisiwe Mkhwebane, set off a political row last month when she said the South African Reserve Bank’s mandate should focus on growth rather than inflation and the currency – rattling investors and the rand.

The central bank has filed a court challenge to quash the recommendation, which is also opposed by Finance Minister Malusi Gigaba and parliament.

The Public Protector’s spokeswoman Cleopatra Mosana said Mkhwebane had filed a notice opposing the challenges to her recommendation.

“The Public Protector is empowered, by the constitution, to take appropriate remedial action with regard to any improper conduct in the state affairs or conduct, or conduct in the state affairs which may result in any impropriety or prejudice,” Mosana said.

Gigaba and opponents of the proposal say Mkhwebane was exceeding her mandate in making the recommendation. Critics say that Mkhwebane’s role is to confront maladministration, not make central bank policy.

Analysts say it is unclear what prompted Mkhwebane’s recommendation and that it would be up to the courts to decide whether her mandate extends to the central bank.

The row over the central bank has highlighted divisions in the tripartite political alliance of the ruling ANC, the country’s biggest union, Cosatu, and the South African Communist Party (SACP) over the role of the reserve bank.

Read More: Reuters Africa