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South African Reserve Bank Governor Lesetja Kganyago stood his ground in saying that it his office’s legal mandate to battle inflation and maintain the stability and integrity of the nation’s currency.
Public Protector Busisiwe Mkhwebane, the state’s prosecutorial arm whose duty is to ensure accountability in public office, proposed last June that the central bank’s monetary policy target be amended. In response, Kganyago assailed the recommendation in court and sought for it to be stricken down, arguing that Mkhwebane has acted in excess of his jurisdiction in the issuance of such proposal.
"Suffice to say, we felt duty-bound by the constitution that when we felt that we were under attack, that we've got to stand up and defend this important institution of our democracy," Kganyago said in an interview.
David Unterhalter, a lawyer for the central bank, said that during the court proceedings, he manifested the central bank’s acknowledgement that Mkhwebane had already conceded on the propriety of the issuance of the recommendation. Nonetheless, the grave constitutional consequences of the recommendation will still necessitate judicial intervention to reaffirm the bank's constitutional mandate.
Kganyago also told the parliament's Standing Committee on Finance that a separate proposal to nationalize the central bank will not adversely affect its mandate, as it will continue to derive its authority from the fundamental law of the nation.
"The SARB's constitutional mandate is to protect the value of the currency in the interest of balanced and sustainable economic growth," Kganyago added. However, he warned that growing concerns on political stability and regulatory uncertainty have put foreign investors on notice.
At present, President Jacob Zuma is confronted with serious corruption allegations, and is also about to face a vote of no-confidence in the parliament on August 8.
In the first quarter of this year, the South African economy dropped into recession, with unemployment rate close to 28 percent. Notwithstanding the figures, Kganyago remains positive about recovery and economic growth in the second quarter.