Ms G Marcus
South African Reserve Bank
PO Box 427
CLARIFICATION OF THE RESERVE BANK’S MANDATE
Let me once again congratulate you on your appointment I look forward to working with you and your team at the Reserve Bank as we manage South Africa’s response to the financial crisis and chart a new economic course to increase the economy’s growth potential to the benefit of all South Africans.
The recession, and its negative impact on the lives of ordinary people, has taught us many lessons about the importance of pursuing policies that promote sustainable and balanced growth. It has also heightened the urgency for South Africa to chart a new growth path that allows the economy to achieve faster growth with more job creation.
To raise South Africa’s growth potential, various studies such as, the report by the
International Growth and Advisory Panel and the report of the Commission on Growth and Development have highlighted the importance of countercyclical macroeconomic policies combined with microeconomic reforms that increase competitiveness and reduce the cost of doing business. These studies acknowledge the crucial role of monetary policy and inflation management in supporting sustainable growth and employment, and in protecting real incomes. Countries set policy, whether explicitly or implicitly, to target a low and stable rate of inflation to reduce the long-term cost of borrowing and provide confidence about the future. This in turn stimulates investment, employment and competitiveness – particularly among exporters and import-competing industries. Low inflation is especially important to protect the living standards of workers and the poor.
As we move into the new fiscal year, I thought it important to reiterate the constitutional mandate of the South African Reserve Bank and indicate how the lessons of the recession and the reality of the aftermath should be taken into account:
In these challenging times there is a great need for our responses to be agile and dynamic. This requires vigilance, ability and strong leadership. I trust that in working together, we will be able to move closer to our goal of raising employment and living standards of all South Africans.
MINISTER OF FINANCE