An independent central bank acts as an important check on government-controlled fiscal policy, South African Reserve Bank (SARB) Deputy Governor Kuben Naidoo has said.
Earlier this year, the governing African National Congress (ANC) party was embroiled in a public row over the role of the central bank, with some ANC officials calling for the bank to do more to stimulate economic growth and job creation.
“The central bank places a check on that (government being in charge of fiscal policy). It places a constraint and limitation, Reuters quoted Naidoo as saying.
He added, “In countries without independent central banks it is often tempting for that limitation or constraint to break down.”
“In the South African context we do feel an independent bank is an important check in the equation.”
Meanwhile, SARB expects to sell its 50% stake in African Bank in a year or two, Naidoo said last week.
African Bank was placed under SARB control after nearly collapsing in 2014 due to the weight of bad loans.
“It is not the intention of the Reserve Bank to own the share for a very long time but we do want to ensure that the bank is sound and stable before we exit,” the deputy governor said, adding a stake sale would depend on market conditions.