Nationalisation of Reserve Bank still on agenda – ANC
Publish date: 12 March 2018
Issue Number: 765
Diary: IBA Legalbrief Africa
Category: South Africa
The ANC – which decided in December to push for full state ownership of the SA Reserve Bank – intends to ‘press on’ with draft legislation to nationalise the bank, despite delaying a parliamentary debate on the issue last week, notes Legalbrief. The ANC’s parliamentary caucus withdrew a motion on full public ownership of the Reserve Bank, which was scheduled for debate on Tuesday, to allow for more consultation within the party and with important stakeholders, says a Moneyweb report. But in a later statement the party said it intended to reintroduce the motion and that it would be fully aligned with the outcomes of its December conference. ‘The postponement creates an adequate platform for the ANC to place on the agenda an instructive motion that places SA on the path of radical socio-economic transformation,’ the party said.
The DA said the motion would have resulted in SA being downgraded to junk status. The party's finance spokesperson David Maynier‚ in a statement on the TimesLIVE site, said: ‘We have been told by Moody’s‚ who are currently in the country conducting a review ahead of a possible sovereign credit rating downgrade to "junk status"‚ that “…any developments which cast further doubt over the independence and credibility of core institutions, including the National Treasury and Reserve Bank, would be strongly credit negative”. What this means is that the mere whiff of an attack on the South African Reserve Bank risks making a sovereign credit rating downgrade to "junk status" more likely.’ However, he noted that despite this the ANC submitted a ‘mad motion’ for debate on the nationalisation of the bank.
The ANC decision has come under attack from Cosatu and the ANC Youth League, says a report in The Mercury. Cosatu and the ANCYL said there was no need for consultation as this was a conference resolution. ‘We don’t need the EFF to opportunistically table this motion and steal our thunder,’ said the ANCYL. ‘The reason behind the withdrawal of the motion is flimsy,’ it said, adding that some ANC figures had been captured. Cosatu spokesperson Sizwe Pamla said the ANC could not backtrack on a conference resolution. He said the time to nationalise the bank was long overdue. ‘It is starting to dawn now that despite the changes that have happened in the Nasrec 54th national conference, we are still seeing the same pattern of indecisiveness, and even retreat, from some of the mandates, especially the Budget and interest rates,’ said Pamla.
There are 170 billion good reasons why the state would want to get its hands on the assets of the Reserve Bank, according to former Reserve Bank employee and now senior economist at Efficient Group, Dawie Roodt, in a Moneyweb report. He says last year’s failed attempt by the Public Protector to alter the mandate of the Reserve Bank may be a prelude of what’s to come. Assets worth R170bn are reflected on the Reserve Bank’s balance sheet as belonging to the state – most of them unavailable for state spending. The state will have to borrow R224bn in the current fiscal year to finance its budget, and will be looking for any cash it can lay its hands on. Of the R170bn Reserve Bank assets belonging to the state, R70bn was accumulated when Trevor Manuel was Finance Minister and tax revenues exceeded budget projections. The amount was transferred from the state to the Reserve Bank to take some of this money out of circulation, but with the agreement that this money could not be used for state spending in the future. The Reserve Bank also holds about R100bn in forex that belongs to Treasury, but this too may only be used for foreign currency transactions, and is not available for domestic state spending. According to Moneyweb, Roodt says the state would love to get its hands on this money to help solve some of its budgetary constraints. ‘I suspect this was the reason the Public Protector last year brought out a report recommending a change in the Reserve Bank’s mandate. Though this was rejected by the High Court, I believe we may see further attempts to weaken the Reserve Bank.’