Kganyago: Sarb mandated by law to protect value of currency

Kganyago told a Parliamentary committee that the bank’s mandate was to focus on inflation and protect the value of the currency.

FILE: SA Reserve Bank Governor Lesetja Kganyago. Picture: GCIS

CAPE TOWN – South Africa’s central bank is mandated by the Constitution to protect the value of the currency, Governor Lesetja Kganyago said on Tuesday, in the wake of a proposal by the head of anti-graft watchdog to switch the target of its monetary policy.

Kganyago told a parliamentary committee that the bank’s mandate was to focus on inflation and protect the value of the currency in the interest of achieving balanced economic growth.

Public Protector Busisiwe Mkhwebane set off a political row and sparked a selling frenzy in the rand currency in June with her proposal to switch the target of the bank's monetary policy from inflation and currency stability to economic growth.

'SWIFT RESPONSE'

The governor says he feels strongly about the independence of the bank.

He’s also faced questions from Members of Parliament about the bank’s private shareholders, its response to Mkhwebane’s report and what steps are being taken to halt the illegal outflow of billions of rands from South Africa.

The briefing takes place as the Pretoria High Court hears the bank’s application to set aside Mkhwebane’s recommendation that its mandate be changed to focus on “the socio-economic well-being of citizens rather than inflation”.

Kganyago and his team are briefing the committee for the first time since Mkhwebane released her report.

He says the bank was able to respond swiftly, filing papers within eight days, because they could see which way things were going when a draft of the report was leaked earlier.

“People even asked if this mandate gets changed would you resign? Why would I resign? Then I would have failed to act without fear or favour. I would have had to act to protect the independence of the institution.”

Kganyago says it is one thing to grant institutions independence under the Constitution but that it is crucial to have people in place who both understand this mandate and are prepared to defend it.

(Edited by Winnie Theletsane)