Respect Reserve Bank’s independence, urges professional body

The Association of Black Securities and Investment Professionals has released a statement urging government to protect the independence the South African Reserve Bank at all costs.

ABSIP’s membership includes sub-sectors such as asset management, corporate banking, Corporate Finance, employee benefits, insurance, investment banking and development finance institutions.

The statement came after a week of conflicting messages from the governing African National Congress regarding the party’s intentions for the central bank.

While the ANC did resolve at its 2017 national conference to nationalise the SARB by buying out its private shareholders, the party’s leading economic minds insisted that its mandate would not be expanded, which is what ANC secretary general Ace Magashule said more than once last week.

ABSIP president, Sibongiseni Mbatha, called on all South Africans, including political leaders, to respect the independence of the SARB as enshrined in the Constitution.

“Our Constitution is clear on the mandate of the SARB. As we seek to stabilise the economy, the bank’s attention should remain as enshrined in the Constitution – price stability, but in so doing it must take into account economic growth and not be blind to unemployment, poverty and inequality,” said Mbatha.

Mbatha said the central bank’s constitutional existence provides for its independence from all sectors of the South African society, including politics and business, in executing its mandate.

“Of course the SARB is a public body fully accountable to both Parliament and the South African people. The bank, as one of the institutions which must serve South Africans through generations, should be insulated from short-term political agendas from policymakers outside of Parliament,” said Mbatha.

The statement said ABSIP believed quantitative easing was an unconditional tool that is already available to all central banks in the world including the South African Reserve Bank.

However, the statement said, this tool should be used under two special conditions (when inflation is so low or close to zero that it threatens to go into deflation and when interest rates are low or so close to zero that there is no more room for further cuts) and not for political point scoring.