JOHANNESBURG – South Africa’s central bank said on Tuesday a recommendation by the Public Protector to change the constitution to promote growth was unlawful and would hit the regulator’s independence by stripping it of its key aim to protect the currency.
“The Reserve Bank has consulted its legal team and has been advised that the remedial action prescribed by the Public Protector falls outside her powers and is unlawful,” it said in a statement.
It would take urgent legal action, it added.
On Monday, Public Protector Busisiwe Mkhwebane proposed a change to the bank’s mandate as part of her findings on an apartheid-era bailout of a bank that was subsequently bought by Absa, now a unit of Barclays Africa Group.
Currency, price stability aims are supportive of growth
The South African Reserve Bank’s mandate to keep inflation low and protect the value of the currency is supportive of economic growth, Governor Lesetja Kganyago said on Monday.
“If we can keep inflation lower, anchoring inflation expectations, that should in turn generate a lower rate of interest to support the economy,” Kganyago told a business gathering.
“We will continue to honour our constitutional mandate and the trust placed in us by the South African society.”
His comments came after the Public Protector, an anti-graft agency, recommended constitutional changes to make the central bank promote economic growth rather than currency and price stability.