The South African Reserve Bank mandate must be dovetailed with the objectives of the second radical phase of the national democratic revolution, our national transformation and development imperatives – SACP
Arising out its annual augmented central committee meeting, held from 23 to 25 November 2018, the SACP rejected attempts at portraying any genuine attempt to open up a constructive discussion of alternative macro-economic policy as “populist”. The SACP reaffirms this principled stance and further reiterates its long standing policy position, that the mandate of the South African Reserve Bank must explicitly include employment growth targeting – with a consequential amendment to the Reserve Bank Act.
As the annual augmented central committee meeting said, the operational independence of the Reserve Bank should strictly be respected; however, our constitution does NOT recognise policy independence for the Bank. In terms of the Constitution, the mandate of the South African Reserve Bank as the Central Bank of the Republic “must be determined by an Act of Parliament and must be exercised or performed subject to the conditions prescribed in terms of that Act”.
The policy mandate of Reserve Bank must be dovetailed with the transformation and development mandate of the democratically elected government as backed by the electorate on the ballot – and not the reverse. As the Constitution clearly states, in performing its operational functions independently and without fear, favour or prejudice, the Reserve Bank must regularly consult with the Cabinet member responsible for national financial matters. The electoral mandate of the current Cabinet member responsible for national financial matters is prescribed in the May 2019 general election manifesto as adopted by the ANC, endorsed by SACP and other Alliance components and publicly unveiled at the ANC’s 2019 January 8th Statement Rally held in Durban.
With regard to the mandate of the South African Reserve Bank, and taking its cue from the 54th National Conference of the ANC held in December 2017, the manifesto categorically states that “The ANC believes that the South African Reserve Bank must pursue a flexible monetary policy regime, aligned with the objectives of the second [radical] phase of [our national democratic revolutionary] transition. Without sacrificing price stability, monetary policy must take into account other objectives such as employment creation and economic growth”. It is important for the ANC, and of course the Alliance as a whole, to remain true to history and loyal to the commitments we have made to our people.
Moreover, it is equally important to appreciate that our debt is largely rand-denominated with a relatively smaller proportion denominated in foreign currencies (essentially the US$). This provides us with important room for manoeuvre if we have the courage to pursue a range of possible alternative macro policy and instrument approaches to dealing with the debt and advancing national production development. In this respect, our situation is significantly different from other middle-income/developing economies where the majority of their debt is dollar denominated.
Issued by the SACP, 5 June 2019
