NEWS

Reserve Bank Files Application To Fight Public Protector's Plans For Change

Recommendations widely condemned as dangerous to economy

27/06/2017 21:35 SAST | Updated 27/06/2017 21:39 SAST
Mike Hutchings/Reuters
Public Protector Busisiwe Mkhwebane.

The South African Reserve Bank (SARB) has filed an application to the High Court on Tuesday, challenging a recommendation by the Public Protector to change the bank regulator's mandate.

SARB governor Lesetja Kganyago said in court filings that the proposal by Busisiwe Mkhwebane to strip the bank's mandate of maintaining currency and price stability would undermine SARB's role in keeping the financial system stable.

He called her attempt to change the Constitution "ill-informed and reckless".

The Public Protector stated last week that SARB had failed in its duties to protect the public by not ensuring that an apartheid-era bailout given to failed bank Bankorp, which was taken over by by Absa, was repaid.

The 30-year-old case became a lever for the Chapter 9 institution to propose changes to the Reserve Bank's mandate. Analysts have said that the case is being used to attack the independence of SARB's monetary policy.

Mkhwebane's call for the bank to no longer focus on protecting the value of the currency has been widely criticized as being well beyond her own mandate.

Mkhwebane wants the bank's mandate amended to "promote balanced and sustainable economic growth".

Her report also found that Absa should repay more than R1 billion Bankorp received from SARB as a bail-out.

The Constitutional Court has ruled that the public protector's findings are binding, but can be challenged in court.

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