South African President Affirms Central Bank's Current Mandate

(Bloomberg) -- South African President Cyril Ramaphosa affirmed the central bank’s mandate, saying the institution must pursue it independently and without fear, favor or prejudice.

“The South African Reserve Bank is a critical institution of our democracy, enjoying wide credibility and standing within the country and internationally,” Ramaphosa said in his state-of-the-nation address in Cape Town on Thursday. “Our constitution mandates the South African Reserve Bank to protect the value of our currency in the interest of balanced and sustainable growth. Today we reaffirm this constitutional mandate.”

Ace Magashule, the secretary-general of the ruling African National Congress, caused shock waves in financial markets this month when he said the central bank’s mandate should be changed to ensure it does more to foster economic growth and create jobs. Ramaphosa repudiated those comments and put the ANC’s plans to nationalize the central bank on hold, saying they weren’t feasible at this stage.

The president said inflation undermines the competitiveness of exports and import-competing firms, putting industries and jobs at risk.

“Price stability is a necessary but not a sufficient condition for economic growth,” he said. “Rising prices of goods and services erode the purchasing power of all South Africans, but especially that of the poor.”

To contact the reporter on this story: Ana Monteiro in Johannesburg at amonteiro4@bloomberg.net

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Paul Richardson, Karl Maier

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