South African Reserve Bank Governor Tito Mboweni scotched talk on Tuesday that MPs in South Africa wanted a say in setting interest rates in South Africa.

He told I-Net Bridge that he did not know where this talk came from, and pointed to official documentation of the Rules Committee of parliament, which merely recommended revisions and alignments to the Reserve Bank Act with the Constitution.

"We are already doing this. Everywhere in the world central bank governors appear before a parliamentary committee," he said.

"They just want to put in the Act what we are already doing," he added.

"MPs don't sit on the Monetary Policy Committee," he pointed out.

He explained that while modern central banks are independent, as organs of state they are accountable to parliament.

It was reported on March 20 in Business Report that parliament wants to give itself the power to force the governor of the Reserve Bank to take the views of elected representatives into account when setting interest rates.

However, Mboweni said all they actually wanted to do was align the Reserve Bank Act with the Constitution.

"MPs are not saying they must have a say in voting [on the repo rate], but that we must align the South African Reserve Bank Act of 1989 with the Constitution," said Mboweni.

"Communication 101"

Mboweni is due to appear before the Portfolio and Select Committee on Finance on Wednesday at around 09.00 am, and the above issue together with Eskom's proposed price increases are the more controversial topics likely to be up for discussion.

Mboweni told I-Net that section 37 of the Reserve Bank Act 90 of 1989 requires the Minister of Finance in the case of non-compliance with the act or regulations of the bank, to give notice to the board of directors of the banks of non-compliance and the requirement of compliance within a specified time.

He noted that in the event the non-compliance is sustained, the minister can apply to a division of the High Court to compel compliance.

"While section 224(2) of the Constitution stipulates that the Reserve Bank is independent, as an organ of state, it is accountable to Parliament in terms of sections 55 and 69," he added.

According to the Rules Committee documents, of which I-Net has obtained a copy, it is stipulated on page 24 that "it is recommended that the Reserve Bank Act 90 of 1989 should be reviewed and revised for purposes of aligning the act with the Constitution in order that Parliament may exercise oversight on it."

And according to Mboweni: "This problem is about communication 101."

I-Net Bridge