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Fri, 07 Jun 2019 13:18 - Updated Fri, 07 Jun 2019 13:18

ANC rifts behind push for new South African central bank mandate

JOHANNESBURG/LONDON- A row within South Africa’s ruling African National Congress (ANC) party about the role of the country’s central bank is unnerving investors because it is being driven by bitter factional battles rather than sober policy debate.

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Broadening the South African Reserve Bank’s remit to promote jobs and growth as well as taming inflation would not be seen by analysts as a problem per se, given other central banks including the U.S. Federal Reserve have similar dual mandates.

The worry is that the push to change the bank’s mandate is coming from a left-wing camp within the ANC that wants President Cyril Ramaphosa to change tack on a range of policies - and is using the Reserve Bank as a battering ram, some ANC members say.

The damaging public row over the bank’s role comes at a time Ramaphosa is trying to build confidence in the economy by tackling long-standing issues such as inefficient state enterprises and corruption.

“This is about the internal politics of the ANC and the factions that are fighting for influence,” said Melanie Verwoerd, a former ANC lawmaker and political analyst.

The ANC is a broad ideological church that has governed South Africa since the end of white minority rule, but it is deeply divided over how to deal with the persistent poverty and unemployment that are hitting its support at the polls.

The row within the ANC surfaced on Tuesday when Secretary General Ace Magashule, part of a group of ANC leftists and populists, said the party had agreed to expand the central bank’s mandate to include employment and growth.

He also said the party wanted the government to consider quantitative easing, a policy widely used by developed economies after the global financial crisis to stimulate growth by pumping cash back into the economy.

Ramaphosa’s allies, including ANC economics chief Enoch Godongwana and Finance Minister Tito Mboweni, rubbished Magashule’s remarks. The ANC then issued a statement in Ramaphosa’s name on Thursday saying there had been no change in central bank policy.

But the South African rand tumbled, and has continued to fall, hitting its lowest level against the U.S. dollar since September 2018 on Friday,REUTERS.

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