Nationalizing South Africa’s Central Bank ‘Not Prudent,’ Ruling Party Says

(Bloomberg) -- South Africa’s ruling party says it’s “simply not prudent” to nationalize the central bank now, given the cost of the exercise and the nation’s weak economy.

“It is our desire for the South African Reserve Bank to be publicly owned,” President Cyril Ramaphosa said in a statement Thursday, issued by his office at the African National Congress. “However, we recognize that this will come at a cost, which, given our current economic and fiscal situation, simply is not prudent.”

The rand was the worst performer among major and emerging-market currencies Wednesday amid confusion over whether the ANC is pushing to change the central bank’s mandate and to use the institution to rescue state-owned companies. While Secretary-General Ace Magashule said its role must be expanded, Finance Minister Tito Mboweni and the ANC’s head of economic transformation, Enoch Godongwana, said no resolutions were made on the central bank at a party meeting last weekend.

“The officials viewed the recent public spats about the mandate of the South African Reserve Bank as not being helpful, and mitigating and undermining the confidence of citizens and of investors,” Ramaphosa said. Government policy stating that the central bank is independent and that its mandate is to protect the of the currency in the interest of balanced and sustainable economic growth hasn’t changed, he said.

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The economy of Africa’s most industrialized country contracted an annualized 3.2% in the first quarter, the biggest decline in a decade.

The rand weakened past 15 per dollar for the first time since October after the release of Ramaphosa’s statement.

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