In a surprise move, Finance Minister Malusi Gigaba is reportedly preparing to join the Reserve Bank in taking Public Protector Busisiwe Mkhwebane's Absa bailout report on review, Business Day reported on Tuesday.
The report recommends that Absa pay back money after an apartheid era bailout that the Public Protector deemed illegal. The Reserve Bank is taking issue with the part of the report which directs that the Constitution be changed to change the Bank's mandate.
Mkhwebane's report recommends that parliament amend the Constitution to change the Bank's mandate from protecting the value of the Rand to the following clause: "The primary object of the South African Reserve Bank is to promote balanced and sustainable economic growth in the Republic, while ensuring that the socio-economic well-being of the citizens are protected."
A Bank representative told HuffPost that they found it a "crude and unsophisticated" report. In addition, it will also oppose the findings of the report in separate legal action.
In a statement, the Reserve Bank said: "She [Mkhwebane] has ordered remedial action directing Parliament to effect a constitutional amendment to the Reserve Bank's powers. This had an immediate and negative impact on the markets and the exchange rate of the Rand.
"The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency and the well understood role that central banks play in securing price stability. The remedial action proposed will have a negative impact on the independence of the Reserve Bank."
Gigaba reportedly met with Mkhwebane last week to see if there was any way her findings could be rescinded, but since her report is final, the only way to do this would be to have it overturned in court. Gigaba has until Friday to take the report on review.
While deputy finance minister Sfiso Buthelezi said Treasury did not have a view on the report, he welcomed the Reserve Bank's decision to take the report on review. But Gigaba said his view was that the Public Protector had overstepped her mandate, as he reportedly told a business briefing at the ANC policy conference last week.
According to Business day, he said: "The public protector did not have the power to direct Parliament to change the Constitution. Changes to the mandate of the Reserve Bank should have been directed to the finance minister for action."