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03 December 2023

South African legislators seek more central bank oversight

By Agencies

South African legislators want more oversight over the central bank and for monetary authorities to take their views into account when setting interest rates, a report said on Thursday.


The Reserve Bank has raised its repo rate by 400 basis points to 11 per cent since June 2006 to try tame inflation, leading to criticism from the ruling African National Congress's communist and trade union allies.


A task team looking at parliament oversight functions has recommended the bank should not be allowed to ignore the wishes of the electorate, and also suggested parliament invoke its powers to make changes to the national budget, the Business Report newspaper said.


The report has been handed to parliaments' rules committee, one of its highest decision-making bodies.


ANC ally, trade federation COSATU, has repeatedly called for parliament to make use of its right to amend the budget and for the inflation targets that the Reserve Bank uses as an anchor for monetary policy to be scrapped.


ANC MP Obed Bapela, chairman of the National Assembly's house committee, said in an interview with the newspaper that the process of redrafting the oversight procedures of parliament had been in the pipeline for four years.


He noted that the central bank's independence was protected by the constitution but that, as an organ of state, it was accountable to parliament.


It was important that the bank was informed about public concern about high interest rates, which was "doing harm to the poor", Bapela said, according to the report.


Reserve Bank Governor Tito Mboweni briefs parliament's finance committee four times a year to coincide with the release of the bank's quarterly bulletin.


The central bank has said it is in favour of more oversight but has jealously guarded its independence in monetary policy decisions. Its seven-person monetary policy committee meets every two months to decide on the next move on interest rates.


Targeted CPIX inflation has exceeded the 3 to 6 per cent band for 10 months, climbing to a five-year record of 8.8 per cent year-on-year in January. (Reuters)