Following a difficult week for the rand and the South African economy, more worrying issues around the ANC’s infighting have come to light.
On Tuesday, ANC secretary-general Ace Magashule announced that the National Executive Committee (NEC) had made a decision to expand the mandate of the SARB to include economic growth and employment, in addition to the possibility of quantitative easing.
However, the Sunday Times reports that Magashule – or members of his team in his office – appear to have inserted parts of the statement just moments before he addressed the media at Luthuli House on Tuesday.
“The Sunday Times has seen the initial statement sent to Magashule by Luthuli House’s department of information and publicity (DIP). The statement Magashule read to the media included four new paragraphs,” it said.
“A comparison of the two makes it obvious that the initial statement was substantially changed to include the bank bombshell, which hammered the rand and raised new questions about SA’s fiscal policy.”
When asked for comment, Magashule denied amending the statement and said that no other statement existed.
A report by the City Press, meanwhile, said that SACP deputy secretary general Solly Mapaila took responsibility for raising the matters in question during the ANC meeting, adding that the intent was to raise questions on how the party’s leaders would follow through on resolutions from the party’s policy conference.
Mapaila warned against the issue being used as a political tool – but accused finance minister Tito Mboweni and the ANC’s economic policy lead,
Enoch Godongwana, of causing the negative reaction in the markets by contradicting standing ANC policy, causing the confusion.
The rand touched R15 to the dollar this week, with technical indicators suggesting more pain is in store for the currency amid rising political risks and concern about the country’s economic outlook.
GDP data released earlier this week showed South Africa had its worst quarterly performance since 2009 in the three months through March.
The ANC’s infighting around the Reserve Bank’s agenda exacerbated losses as investors questioned whether President Cyril Ramaphosa has enough support to advance his reform agenda.
Adding fuel to the fire, rating agency S&P Global said that a change in the SARB’S mandate could lead to a ratings downgrade.
“It’s a case of the perfect Molotov cocktail,” said Matete Thulare, a Johannesburg-based analyst at FirstRand Bank. “Without sounding too gloomy, the picture looks very grim.”
“The year-to-date upside trend in USD/ZAR remains intact,” said Piotr Matys, a currency strategist at Rabobank in London.
“The underlying trend in the South African economy is clearly weak and the outlook will remain challenging until significant progress is made in implementing structural reforms.”