Reserve Bank governor Lesetja Kganyago has fiercely defended the independence of his institution saying the constitution is clear about its mandate.
Kganyago and his deputies appeared before Parliament’s standing committee on Finance and told them the Reserve Bank had started drawing up court papers in December already when a leaked draft of Public Protector Busisiwe Mkhwebane’s ABSA report indicated that the matter “would be handled badly”.
But‚ he said‚ the handling of the release of the report by the Public Protector caught them by surprise.
He said he had been in an exco meeting when Mkhwebane held her media conference. They attempted to get a copy of the report which only arrived at 5pm that afternoon “by which time the market had tanked”.
Responding to a question from the DA’s David Maynier on the impact of politics and the “assault” on the Reserve Bank’s independence on credit ratings‚ Kganyago cited a Moody’s report released on Monday which highlighted “the timing of the public protector’s report (after a major cabinet reshuffle and before the ANC policy conference) points to growing political pressure for less independent monetary policy‚ a key pillar in our assessment of South Africa’s gradually deteriorating institutional strength”.
He also said‚ the normally unshakeable central bankers he interacted with at meetings of the Bank for International Settlements‚ were asking him “what is going on?”
“And central bankers are not ones to worry about other people’s politics‚” he said.
He said the January meeting had come just after the draft public protector’s report had been leaked and the May meeting was held just days after the report was released.
He said members of the BIS‚ who viewed the SARB as a “beacon” of independence were concerned.
“And central bankers are not ones to cry wolf unless they are worried‚” he said.
“And I took this as a very clear signal that the uncertainty is impacting on the confidence of investors‚ now it’s not just domestic‚ but foreign ones as well and that emboldened us even more to contest the findings of the report because it was very clear‚ if they came‚ it would have far reaching consequences for this economy.”
Kganyago also expressed concern that it was the “institutions that are working‚ and that are working well‚ that have come under attack”.
Kganyago painted a bleak picture of the South African economy saying business and consumer confidence were even lower than they had been in the wake of the 2008 global economic crisis.
Asked for his views on what should be done and what could go wrong‚ he said creating policy certainty was one of the only ways to restore that confidence‚ but was challenged by the ANC’s Derek Hanekom who said “it’s a certainty that money is being stolen‚ that there is corruption‚ that there is wrongdoing- it’s got nothing to do with policy uncertainty‚ that is a reality”.
To which Kganyago responded “that was going to be my answer to what could go wrong: the looting could continue”.
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