Public protector's bizarre instruction harms our wellbeing

21 June 2017 - 08:02 By The Times Editorial
Public protector Busisiwe Mkhwebane in her offices in Pretoria. File Photo
Public protector Busisiwe Mkhwebane in her offices in Pretoria. File Photo

She wants parliament to change the bank's mandate from protecting the rand's value to protecting the socioeconomic wellbeing of citizens. It is unlikely this will happen for a myriad of legal reasons, but that does not mitigate the damage that her signal sends.

The rand lost 2% of its value in the immediate aftermath of the announcement, a clear indication of the added uncertainty this brings to our battered economy.

Mkhwebane's remedial action targeting the Reserve Bank appears to be an assault on arguably the last remaining major institution of the economy which is capable of acting independently.

The Treasury and the South African Revenue Service have been stripped of credibility over the last year with the seismic removal of Pravin Gordhan as finance minister and the exodus of top tax officials.

The bank has already indicated it intends to challenge Mkhwebane's order in court and it is a battle we will need to win to retain some semblance of economic confidence in South Africa.

As many commentators point out, Mkhwebane's order is at odds with its stated goal. The bank's current mandate, in which it targets inflation, precisely protects the socio-economic wellbeing of South Africans that Mkhwebane apparently seeks. It does this through using the interest rate to dampen inflation and maintain price stability - and the ultimate beneficiaries are the poor.

Why then this bizarre instruction? We can only hope it is a result of economic illiteracy and that it is not motivated by something more sinister.