Ramaphosa’s ‘quiet diplomacy’ on SARB is adding to SA’s economic crisis

6 June 2019

The ruling party’s policy schizophrenia on the South African Reserve Bank (SARB) has already cost the South African economy dearly, with the Rand losing almost 2% on Tuesday following the confusion. The silence from President Cyril Ramaphosa is deafening. It is time that President Ramaphosa publicly clarifies the ANC and his government’s position on the SARB.

The President should stop ANC Secretary General Ace Magashule from ever speaking on the economy, and should publicly explain and clarify how the ANC’s National Executive Committee came to make the damaging statement that it did. This cannot be explained away as an innocent miscommunication.

Both the Minister of Finance, Tito Mboweni, and the SARB Governor, Lesetja Kganyago, have come out in defence of the SARB’s mandate and ruled out "quantity easing", after Magashule announced on Tuesday that the NEC had decided to change the mandate of the SARB and that quantitative easing will be considered. However, investors are still not convinced.

President Ramaphosa has not consistently protected the mandate and independence of the SARB, and has yet to quell the uncertainty created by the contradictory statements given by the ANC and Ministers.

The South African economy is performing very poorly, having contracted by 3.2% in the first quarter of 2019.

As confirmed by the International Monetary Fund, there is nothing wrong with our monetary policy, as overseen by the SARB. Our malady is bad policy in government, that is strangling growth in the economy.

To get the economy working, we need to:

- Address the systemic problems at our State-owned Enterprises, specifically Eskom and SAA. The DA has a plan to stabilise and secure South Africa’s power supply, as detailed in our Cheaper Energy Bill which seeks to break Eskom into two separate entities and introduce a competitive energy market;

- Protect and support SMMEs as proposed in the DA’s Jobs Bill; and

- Oppose threats to the economy and fiscus such as NHI and expropriation of property and land without compensation.

South Africa cannot afford the kind of reckless utterances coming from the ruling party as the consequent policy uncertainty will continue to compromise investment, economic growth and job creation.

The independence and current mandate of the SARB must remain intact. The DA will use all mechanisms at our disposal to strongly oppose any attempts to change the SARB’s mandate or compromise its independence.

Issued by Geordin Hill-Lewis, DA Shadow Minister of Finance, 6 June 2019