The rand extended its losses against the dollar on Friday, trading 0.7 percent lower at 0730 GMT, while bonds weakened after Gigaba’s comments on the possibility of seeking outside assistance. The huge scale of financial recklessness and collusion brought forth the call for an absolute independent central bank. Finance Minister Malusi Gigaba reaffirmed his support for the independence of the central bank on Friday, saying an anti-corruption agency had overstepped the mark this month in suggesting changes to the bank’s anti-inflation mandate.
The public protector calls for an overhaul of the bank’s mandate rattled investors, hit the rand currency and exposed worsening divisions between state institutions in South Africa, where President Jacob Zuma is embroiled in a widening net of scandals.
“The public protector does not have the power to direct parliament to amend the constitution,” Gigaba told business leaders at the start of a policy conference of the ruling African National Congress.
“These recommendations should have been directed at the finance ministry. We should all insist on the independence of the South African Reserve Bank.”
Gigaba also called for “drastic measures” to kick-start growth in Africa’s most sophisticated economy, which is now mired in its first recession in nearly eight years.
“Should the main indicators continue to disappoint any further we may have to seek assistance from quarters we have thus far avoided,” Gigaba added, without elaborating.
Earlier this month, investors took flight when Public Protector Busisiwe Mkhwebane said the central bank’s current mandate — centred on maintaining currency and price stability — was focused on a “few commercial interests” rather than boosting the economy.
The Reserve bank immediately rejected that, saying Mkhwebane’s office had no business in making recommendations about how it is run, and this week filed a court challenge asking for the recommendation to be set aside.
South Africa’s parliament and the ANC also rejected the recommendation, but the country’s largest union backed the proposal.
Critics of President Zuma see the public protector’s comments as an attempt to undermine the bank’s authority as part of a broader attack on state institutions, including the finance ministry, the tax authorities and the public protector’s office.
Zuma rejects such criticism.