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THE SMART NEWS SOURCE | Feb 09 2010 22:15 | LAST UPDATED Feb 09 2010 22:15 |
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The ANC and its allies agreed to look at broadening the mandate of the central bank from merely tackling inflation, ANC secretary general Gwede Mantashe said on Sunday. Mantashe told reporters the alliance, which includes the South African Communist Party and the Congress of South African Trade Unions, had formed a team to study the effects of a strong rand, following warnings about the repercussions of its strength on the economy. The ANC and its allies met for three days to iron out their differences, with the government under pressure to shift economic policy to the left. Cosatu and the SACP want higher spending and for the inflation targets that guide monetary policy to be scrapped. Mantashe said the partners had agreed at a "robust" meeting to look at the central bank's mandate. "The summit agreed that the alliance task team on macroeconomic policy must remain seized with reviewing and broadening the mandate of the Reserve Bank," he said at a briefing after the meeting, adding that monetary policy should be in line with the aims of fiscal policy. The Reserve Bank has the task of fighting inflation, keeping it between 3% and 6%. In September, inflation was 6,1% year-on-year, compared with almost 14% a year ago. Critics say this had led to interest rates that are too high, which Cosatu blames for exacerbating poverty. They want the target scrapped and interest rates cut to help pull the economy out of its first recession in nearly two decades. The central bank has cut its repo rate -- its base lending rate -- by five percentage points since December despite inflation still being outside the band, although at 7% it remains high by global standards.  CONTINUES BELOW Weaker rand Cosatu and the SACP want the government to intervene to weaken the rand, which has firmed more than 20% against the dollar and gained sharply on the euro this year. "We are looking into this because if this [global] crisis is encouraging imports and not exports, it deepens our crisis," Mantashe said. The central bank and Finance Minister Pravin Gordhan have warned of the effect of the gains on export sectors and the economy in general, but have stressed the policy of a floating exchange rate will stay. Economic Development Minister Ebrahim Patel this month agreed to a debate on the rand. Cosatu president Sidumo Dlamini told Reuters the allies would continue discussing its proposal, raised at the meeting, that the alliance and not the ANC, be the centre of political power. This would shift power away from the party, giving Cosatu and Communist Party greater influence by making them more directly responsible for setting government policy. Such a change, if it happened, could unsettle foreign investors. Earlier media reports said many ANC officials were opposed to the plan. Mantashe said the meeting endorsed Trevor Manuel as head of the National Planning Commission (NPC). Manuel is unpopular with the left for his relatively conservative fiscal policy during more than a decade as finance minister, but is respected by investors who want him to remain a key player. The NPC -- announced in May but yet to start work -- will use a panel of experts to guide overarching government policy. - Reuters TOPICS IN THIS ARTICLE
Comments
It's amazing how people want to control something they have no understanding of how it works. We need inflation down to acceptable levels, thereafter more investment which will create new jobs. If we try and manipulate the free market system we will end up like Zimbabwe. If these "allies" have their way our currency will weaken beyond all proportions, mainly due to investor outflow resulting in fewer jobs. Inflation will sky rocket again. Stick to your politics, your trade unions & outdated communism please!
Duncan Willis on November 16, 2009, 11:04 am
Oh shit, here we go.
Apocalypse Now on November 16, 2009, 12:00 pm
If there is one thing that the alliance should, is to ask Gill Marcus to cut the interest rate by 100 basis points, and stop trying to interfere with rand fluctuations.
African Mzansi on November 16, 2009, 1:06 pm
What is the purpose of the National Planning Commission? Do we really need the so-called NPC? We are not a unitary state- we are a federal state. Therefore, the NPC is unconstitutional. The government says the purpose of national planning is to ensure that the nation has one plan. If they wanted the NPC they should have amended our constitution first. Not all provinces are controlled by the ANC, do you expect provices that aare not led by the ANC to follow NPC’s plans?
NPC plans something; provinces, municipalities and ministries must follow what the NPC plans. Is this ministry constitutional? If provinces implement what the NPC has planned that would be the violation of the constitution. The constitution says the national govt should not interfere with the provinces and municipalities (of course there are circumstances where the national govt can intervene, not interfere like they are doing with the NPC) How is this ministry going to function? For example, the DA controls Western Cape. The ruling party and the DA have diametric policies, do you think the DA will acquiesce to NPC’s plan since Trevor Manuel is from the ANC. We do not need so-called National Planning Commission in our country. I mean, what are they planning? To be implemented by who? We have enough ministers, premiers etc. Methinks Manuel’s appointment is meant to placate the elite. I am shocked that “the left” are supporting this ministry. We expect animosity between the left and Trevor-Trevor represents the elite but the left represent the masses
Themba Mayinga on November 16, 2009, 1:07 pm
African Mzansi on November 16, 2009, 1:06 pm , Now that's what I'm talking about. I agree and support any such arrangement. And, forget about asking for it, damn, they should demand it. This is one positive thing that helps a little.
Apocalypse Now on November 16, 2009, 2:21 pm
Themba Mayinga, we are not a federal state. No reference to federalism is even mentioned in the constitution.
The Moxster on November 16, 2009, 5:11 pm
Wow, now I see why Tito was removed, to heve someone we can control.
Some one tell me, where are we going with this????????
LuthAndo Mackinzie on November 19, 2009, 11:28 am
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