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Uproar over 'radical rand plan'

Pieter du Toit and Jean-Marie de Waal | Fri, 23 Oct 2009 10:14

[miningmx.com] -- THE Department of Economic Development and the Governor of the Reserve Bank on Thursday reacted sharply to a report in that day's newspapers, Beeld, Volksblad and Die Burger, that the government was considering certain "radical interventions" to alter economic policy - including freezing the rand's exchange rate.

The rand reacted sharply to this news early in the day.

The information was obtained from a well-known senior government official, and the newspapers stand by the report.

Zubeida Jaffer, spokesperson for the Department of Economic Development, responded by saying no announcement on fixing the rand had been made on Thursday.

"It has also not been confirmed that any proposals - radical or otherwise - are being considered. The report that appeared this morning [Thursday] was news to us as well."

Tito Mboweni, Governor of the Reserve Bank, also indicated on Thursday that he knew nothing of the proposal.

Cabinet spokesperson Themba Maseko on Thursday at an information session after a meeting of the Cabinet did not wish to react specifically to allegations of possible plans to "fix" the rand at a predetermined exchange rate, other than to say it had not been a discussion point on the Cabinet's list of business.

As to the economic portfolios, Maseko said President Jacob Zuma would soon make an announcement.

"He is still considering the issue and will decide on the best location for this function (the determination of economic policy) within government. The matter is receiving urgent attention at the highest levels. "The president has clarity on the issue and an announcement will be made as soon as possible," Maseko said. The ANC in its turn said the issue of fixing the rand had not arisen in discussions by the party's economic transformation committee.

Thaba Mufamadi, chairman of the committee, as well as of the parliamentary standing committee on finance, told a press conference regarding decisions taken in the ANC's parliamentary caucus that it was not for parliament to make the decision on behalf of the executive authority.

He added that the green paper on planning was also attempting to determine who should be responsible for macro- and microeconomic policy.

ANC chief whip Dr Mathole Motshekga endorsed this view and said it was for the head of the executive, Zuma, to allocate portfolios and functions to ministers.

"It would be unfair of us to speculate on something belonging in another sphere," he said.

This comes in the wake of assertions from government circles that this type of fixing of the country's currency could possibly be part of a series of "radical interventions" under consideration by the ANC.

Sudden resignation

The speculation comes against the background of Tuesday's sudden resignation by Joel Netshitenzhe, for many years head of policy in the presidency, as well as a statement by Zuma that the Department of Economic Development will be responsible for planning on micro- and macroeconomic development, and the setting up of Cabinet subcommittees with Trevor Manuel being excluded from the economic committee.

There is uncertainty about the precise roles that Planning Minister Manuel, Finance Minister Pravin Gordhan, Trade & Industry Minister Rob Davies and Economic Development Minister Ebrahim Patel will have in determining economic policy.

It is common knowledge that the ANC is, despite the steady growth rate over the past decade, unhappy with levels of job creation. It is in particular its alliance partners, trade union Cosatu and the SACP, that are advocating drastic intervention and a greater degree of government interference in the economy.

- Sake24.com