Reserve Bank files court papers against Public Protector
The South African Reserve Bank (SARB) has filed an urgent application to the High Court in Pretoria to have the Public Protector's recent instructions reviewed and set aside.
It comes after Busisiwe Mkhwebane instructed Parliament to amend the Constitution in terms of the central bank's mandate and powers.
In the papers, the SARB Governor Lesetja Kganyago says they are filing an urgent application to set aside the remedial action of the Public Protector's report into the alleged failure to recover misappropriated funds from Absa.
"In the impugned remedial action, the Public Protector instructs Parliament to amend the Constitution to strip the Reserve Bank of its primary function - to protect the value of the currency," Kganyago says in his affidavit.
"The Public Protector has no power to amend the Constitution, let alone to instruct Parliament to do so."
Kganyago says Mkhwebane's actions had damaging and immediate consequences for the country in terms of investor confidence, seeing the Rand depreciate by 2.5 percent against the US Dollar on Monday, 19 June.
"R1.3 billion worth of South African government bonds were sold by non-resident investors. Although some of these sales have subsequently been reversed, they were still significant," says Kganyago.
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Kganyago says international ratings agency Standard & Poors warned that South Africa's credit rating could be downgraded further if government were to act in the Public Protector's remedial action.
"The ratings agencies have been clear that the independence of the Reserve Bank and its policy framework is one of the strongest pillars supporting the South African economy and underpinning their rating assessment," says Kganyago.
"This confidence in the Bank stems directly from the role it plays in achieving and maintaining price stability."
Kganyago says the "gross overreach" by a Chapter Nine institution must be stopped in its tracks so that certainty and predictability about the SARB role in the country's constitutional democracy is affirmed.
"With every day that passes without this overreach being put right, uncertainty pervades the markets and the South African economy suffers."