The independence of the South African Reserve Bank is a key credit-rating strength and compromising this could hinder the assessment, S&P Global Ratings said.
“We view the track record and independence of the SARB as a key ratings strength,” Director Ravi Bhatia said in an emailed response to questions Friday. “If its independence is compromised, this could undermine what we view as a key ratings strength.” South Africa’s long-term foreign-currency assessment is BB at S&P, the company’s second-highest non-investment-grade rating.
Infighting within the ANC over the mandate of the country’s central bank exacerbated the rand’s losses on Friday as investors questioned whether President Cyril Ramaphosa has enough support to advance his reform agenda.
The rand is on track for its worst week against the dollar since October amid confusion over whether the ANC is pushing to change the central bank’s mandate and to use the institution to rescue state-owned companies. While Secretary-General Ace Magashule said its role must be expanded, Finance Minister Tito Mboweni and the ANC’s head of economic transformation, Enoch Godongwana, said no resolutions were made on the central bank at a party meeting last weekend.
“The officials viewed the recent public spats about the mandate of the South African Reserve Bank as not being helpful, and mitigating and undermining the confidence of citizens and of investors,” Ramaphosa said in a statement Thursday. Government policy stating that the central bank is independent and that its mandate is to protect the value of the currency in the interest of balanced and sustainable economic growth hasn’t changed, he said.