ABSTRACT
This chapter assesses the role of politics from late apartheid South Africa to the ratification of the Constitution of democratic South Africa in 1996 as the country moved in step with global developments to secure the autonomy and independence of the South African Reserve Bank (henceforth SARB or SA Reserve Bank). While the nature of the negotiations over a political settlement appeared well organised with all major parties being well prepared, this was not the case in respect of negotiations over economic issues, which were marginalised and occurred in the periphery of formal talks. The rather messy discussions between the major political protagonists in respect of the economics of the transition is most clearly evident in the debate about central bank independence, which saw the market-oriented view of the late apartheid government prevail over the initial dirigiste policy stance of the African National Congress (ANC) which favoured greater autonomy for the central bank but not full constitutional independence. As negotiations progressed the two policy positions converged and central bank independence with a price stability mandate was enshrined in the interim and final constitution. However, some 25 years later certain political manoeuvres within the ruling party again potentially threaten the independence of the SARB.
This research paper reports, among other issues, on an interview on this matter with former President FW de Klerk and with former central bank Governor Dr Chris Stals on the subject of how the South African government moved towards granting the Bank its independence during the transition to democracy in South Africa.
After 25 years, central bank independence might have come full circle, with the current ANC government’s stated objective as agreed at its National Conference in December 2018 to ‘nationalise’ the SA Reserve Bank. While it is not clear what the real motives for this change may be (as the debate is clouded in political double speak), there is a danger, likely to be seized up by credit rating agencies and potential foreign investors that this is possibly the first step in taking the South African Reserve Bank under executive control again, as was the case in the 1980s.
