South Africa Must Not Undermine Central Bank Independence, Gigaba Says

South Africa should protect the Reserve Bank’s independence and must evaluate what the effect of the graft ombudsman’s recommendations to alter its mandate will be, Finance Minister Malusi Gigaba said.

“I respect the right of the Public Protector to make whatever determination, but I also support fully the independence of the South African Reserve Bank,” Gigaba said in a Bloomberg Television interview in London. “We must not take any measures that are going to undermine that independence and so whatever decision we arrive at must not undermine the independence of the South African Reserve Bank.”

Public Protector Busisiwe Mkhwebane’s suggestions to alter the role of the central bank to focus less on inflation and more on societal needs has raised fears about eroding the independence of the institution, with the ruling African National Congress and business groups accusing her of overstepping her powers.

The ANC said the recommendations are unlawful. The Public Protector’s suggestions were part of a report following an investigation into a Reserve Bank bailout for Bankorp, a unit of Barclays Africa Group Ltd., almost three decades ago.

Barclays Africa will go to the country’s high court to challenge Mkhwebane’s decision that it should pay the government 1.125 billion rand ($86 million), it said Wednesday, adding that the misconceptions in her report are profound and damaging to its reputation.

“To change the constitution would not be unlawful, but the manner in which the recommendation is being made would be unlawful,” Gigaba said. The context and purpose of the proposed “amendment is not quite clear to me given the issues that were being investigated.”

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Gigaba said he still needs to study the recommendations before deciding whether he will support the central bank’s fight against the move.

Mkhwebane recommended in a report on Monday that parliament start a process to change the constitution to make the central bank focus on the “socioeconomic well-being of the citizens” rather than protecting the value of the currency to contain inflation.

The Reserve Bank has said it plans to approach the nation’s courts to review Mkhwebane’s directive and set it aside as it falls outside her powers.

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