Changing SARB mandate will open Pandora's Box: economist
Public Protector Busisiwe Mkhwebane's proposal that the mandate of the South African Reserve Bank (SARB) be changed in order to be more 'transformation-led' threatens to open a Pandora's Box of additional risks for markets and rating agencies.
This according to North West University School of Business and Governance economist Professor Raymond Parsons.
Professor Parsons says this call comes at a bad time for the country.
"While it seems unlikely that any change will happen immediately, the fact that this matter is being raised now is negative for South Africa at a time when the country is economically vulnerable.
"It injects an unnecessary additional element of uncertainty into the economic debate when South Africa can least afford it, and when levels of confidence require to be boosted instead."
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Parsons says we must recognise that the SARB is highly respected both here and overseas for its conduct of monetary policy, and is also widely regarded as an important bastion of institutional strength in troubled economic times.
"The SARB as an institution has become one of South Africa's major national assets. This was particularly emphasised in the recent decisions by the three major credit rating agencies to cut South Africa's investment rating, in which they nonetheless stressed the stability of key institutions like the SARB for South Africa's future economic prospects."
Professor Parsons says it is also puzzling why the Public Protector has ventured unexpectedly into the highly complex issue of monetary policy.
"Real economic transformation in South Africa needs to be driven by other socio-economic policies, not by monetary policy. Like the office of the Public Protector itself, the independent role of the SARB needs to be respected. We must hope the SARB will strongly defend its existing mandate and autonomy through the appropriate channels."