Mboweni takes jab at colleagues who want Reserve Bank nationalised

Finance minister Tito Mboweni has praised the Reserve Bank for declaring increased profits to the government - even if the state does not fully own the Bank.

In his medium-term budget policy statement [mini-budget] on Wednesday, Mboweni said the Bank had not only kept inflation stable but also delivered good profits, contributing R200m to state coffers in profits from its operations.

LISTEN | 2019 Medium-term budget policy statement highlights

“The Bank is a strange creature: even though we do not own it, the National Revenue Fund receives 90% of their profits, after provisions ordinarily made by bankers. It is a beautiful arrangement - we do not have to invest any money in the Bank but we get all the profits, plus taxes,” he said.

Mboweni’s praise of the Bank has been seen as a tacit jab at critics of the Bank’s ownership structure - many in his own ANC, who have been campaigning for the nationalisation of the Bank.

The Bank has more than 261,000 shares split between more than 600 private shareholders. Many of these shareholders do not live in South Africa, but neither do they have a say over monetary policy and other areas that fall within the Bank’s mandate.

The ANC resolved at its elective conference at Nasrec in December 2017 that ownership of the Bank must revert back to the state. But the government has been reluctant to implement this resolution, owing to the hefty costs involved in buying out the Bank’s shareholders.

President Cyril Ramaphosa had to step in to calm jittery markets in June after ANC secretary-general Ace Magashule said a meeting of the party’s national executive committee had decided to alter the ownership and mandate of the Bank, and also to introduce quantitative easing (increasing money supply to boost economic growth).

Ramaphosa issued a statement after a subsequent of meeting of the party’s top six, where he called Magashule to order, reiterating that nationalisation of the Bank, while desirable, was not prudent. 

“It is our desire for the Bank to be publicly owned. However, we recognise that this will come at a cost, which given our current economic and fiscal situation, is simply not prudent,” said Ramaphosa at the time.