South Africa’s graft ombudsman has suggested changes to the nation’s constitution to amend the Reserve Bank’s primary objective of protecting the value of the currency.
The chairman of parliament’s justice committee should start a process to change section 224 that sets out the central bank’s primary objective, Public Protector Busisiwe Mkhwebane said in a report handed to reporters in the capital, Pretoria, on Monday. The proposed amendments remove the reference to the Reserve Bank’s role to protect the value of the rand, a key element of the regulator’s inflation-targeting mandate.
Mkhwebane calls for the section to say “the primary object of the South African Reserve Bank is to promote balanced and sustainable economic growth in the republic, while ensuring that the socioeconomic well-being of the citizens is protected.”
The central bank’s independence is protected by the constitution and is cited as a pillar of institutional strength by credit-rating companies and investors. Altering the mandate may add to policy uncertainty after a cabinet reshuffle in March and changes to other regulations, including the Mining Charter. While Mkhwebane can propose changes to the constitution, she can’t order parliament to alter the law. A two-thirds majority of lawmakers is needed to change the constitution.
The rand extended a decline after the comments and was 1.6 percent weaker at 13.0175 per dollar by 8:57 p.m. in Johannesburg.
“The market doesn’t like the fact that they’re looking at changing the constitution or the mandate of the Reserve Bank,” Wichard Cilliers, a trader at…