Top Government Officials Backtrack on Reserve Bank Nationalisation Threats
In the wake of comments made about nationalising the SA Reserve Bank (SARB) and the devastation which this wrecked on the value of the Rand verse other currencies, top government officials have now come out loudly announcing that though this would be a nice idea it does not seem to be a good idea right now.
The ruling party have decided that one of its goals is to see the SARB be publically owned. Certain other political parties have put forward possible legislative ideas on how that could happen but international investors and rating agencies feel nervous about this step, seeing it as the first in many that might see SA heading for a Zimbabwe-like economy.
Statement From Top 6
President Ramaphosa, in particular, has headed up the charge to rally market confidence by publically backtracking on this issue by saying that though it is the ANC’s desire for the Reserve Bank to be publically owned they “recognize that this will come at a cost, which given [the] current economic and fiscal situation, is simply not prudent”.
Recently the local economy shrunk by a massive 3.2% which is the most in recent history and means scary things for local business and consumers in general.
‘Also being discarded is the threat of simply printing more money’
Also being discarded is the threat of simply printing more money and giving it to government to spend to pay some of its debts (known as quantitative easing). The President released a public statement about these topics in the hopes that it would help stabalise the Rand and help boost investor confidence which is much needed when statistics show that the local markets have been underperforming. Removing additional concerns about the loss of investment through steps like nationalisation and expropriation without compensation may hold back the flood waters for a moment or two.