Exasperated Mboweni’s rebuke to reckless statements that undermine Reserve Bank

There are few people that enjoy their tweets as much as Tito Mboweni, well maybe President Donald Trump. But Trump’s social post can cause jitters in markets. This week Mboweni’s posts were meant to calm a storm. When the ANC Lekgotla concluded that the Reserve Bank should consider “quantitative easing”, giving another kick in the teeth to the rand which was already sliding because of the day’s dismal first quarter GDP figures, he was quick to take to Twitter to say that the Government sets the mandate for the South African Reserve Bank. “There is no quantitative easing thing here.” Speaking at the release of new commemorative coins, Mboweni said he has been called by the international media and has been asked what people in South Africa have been smoking. He also released a much longer statement on Facebook slamming political interference of the Reserve Bank. – Linda van Tilburg

What is the obsession with the SA Reserve Bank?

From Finance Minister Tito Mboweni’s Facebook page

1) I am now reaching a point of total exasperation with this continued attacks and obsession with the SA Reserve Bank.

2) I have explained on many occasions the purposes and functions of the SA Reserve Bank. What is the issue? What is the problem you want to solve? You blame the Reserve Bank for everything. Water, unemployment, electricity, growth, … No people, No.

3) Here is the economic policy architecture:

3.1) The constitution says that the mandate of the SA Reserve Bank is to “protect the value of the currency in the interests of balanced and sustainable growth in the republic”.

3.2) Then there is this: the SA Reserve Bank operates independently without fear, favour or prejudice provided that there is regular consultation with the minister of finance. Done.

3.3) Read carefully. The PFMA clarifies the role of the minister of finance and the National Treasury. I quote IN EXTENSO: “Section 5: Establishment: 1) A National Treasury is hereby established, consisting of , a) the minister, who is the head of the (National) Treasury; and …2) The minister, as the head of the National Treasury, takes the policy and other decisions of the (National) Treasury, except those decisions taken as a result of a delegation or instruction in terms of Section 10″.

3.4) Further in the FUNDAMENTALLY critical Section 6, the PFMA says: “FUNCTIONS AND POWERS

1) The National Treasury must

a) promote the national government’s fiscal policy framework and the co-ordination of macroeconomic policy

b) co-ordinate inter-governmental financial and fiscal relations”

4) The point that is normally missed in the public conversations is that in LAW, the minister of finance is actually, in terms of section 6 of the PFMA responsible for the co-ordination of macroeconomic policy in the whole government. It is a very serious matter. In fact, correctly put it is the ministry of finance and economic co-ordination by law.

5) NOW THEREFORE,

5.1) Let us leave the SA Reserve Bank alone to pursue its mandate without fear, favour or prejudice,

5.2) Let us focus on micro-economic restructuring to grow the economy,

5.3) Let us stop shouting at business and embrace them as partners in economic growth, investment and job creation,

5.4) Let us embrace ALL farmers, black and white to grow our agriculture. Last year agricultural exports were at about $11bn. Jobs right there.

6) I rest my case.