New Monetary Policy Framework

Monetary policy[1] is the process by which the government, central bank, or monetary authority of a country controls:

(i) the supply of money,

(ii) availability of money, and

(iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy.

The ANC 52nd National Conference identified five priority areas for the next ANC government:

• creation of decent work and sustainable livelihoods,
• health,
• education,
• crime and
• rural development, including land reform, food production and security.

The 2009 election manifesto of the ANC says "Our macro-economic policy over the next five years is informed by the priorities that have been set by the ANC 52nd National Conference. The monetary and fiscal policy framework that government will operate is structured to provide for accelerating growth, creating decent work opportunities, developing and growing the economy whist continuing the transformation of the economy.

This means that over the next 5 years, the macro-economic policy will decisively address the most significant obstacles that limit the pace of employment creation and poverty eradication and will intervene in favour of a more sustainable and inclusive growth for all South Africans.

Our fiscal and monetary policy mandates including interest rates and exchange rates need to take into account employment considerations, economic growth and other developmental imperatives".

It is within this context that I propose a new monetary policy framework which is aligned with the wishes of the people and the long term interest of South Africa.

The long term objective should be to achieve an economy that is growing, at a sustainable pace, which creates jobs and an economy that is inclusive.

The following targets are proposed to be incorporated within the mandate of the South Africa Reserve Bank and South African Government:

• Economic growth rate - 6% or more
• Employment rate - 90% of Economically Active Population or more and
• Inflation rate - 4% to 8%

Senzo Masengemu is a former Secretary General of BMF Student Chapter in Technikon Natal (now DUT)

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[1] wikipedia