South African Reserve Bank Governor To Step Down In November

Written by Kevin Mwanza

Sep 19, 2014

Written by Patrick McGroarty | From WSJ

South African Reserve Bank Governor Gill Marcus said Thursday that she will step down when her contract expires in November, bringing to an end a tenure that turned the country’s top banker into a persistent critic of her government’s economic policy.

Ms. Marcus said she had told President Jacob Zuma that she doesn’t want to serve a new five-year term. She wouldn’t say why, but the 65-year-old former antiapartheid activist has regularly voiced her frustrations at the bank’s limited power to do more to jump-start growth and create jobs.

Thursday, Ms. Marcus complained about “the anemic state of the domestic economy, rising unemployment and the downside risk to the growth forecast.” That weak growth has hamstrung the bank’s ability to raise rates to cap inflation.

At the news conference, Ms. Marcus also said South Africa’s central bank would keep its key interest rate on hold at 5.75%.

Ms. Marcus has served just one five-year term at the helm of the reserve bank, overseeing a rocky period for South Africa and the world that began just as the global financial crisis took hold in 2009.

South Africa’s rand currency has lost nearly half its value against the U.S. dollar since her appointment. Economic growth has dropped from above 3% annually in her first year in office to what Ms. Marcus said Thursday is likely to be a rate of just 1.5% in 2014.

Meanwhile inflation has risen to 6.4% annually and the official unemployment rate has lingered above 25%.

Part of the inflation problem has been South Africa’s weak rand, but chronic labor unrest has also contributed. Ms. Marcus warned that strikes like a five-month work stoppage by tens of thousands of platinum miners this year resulted in raises that could maintain inflation rates above the bank’s target ceiling of 6% for some time.

“Excessive wage settlements could have adverse impacts on employment, inflation, the general competitiveness of the economy and the profitability and viability of small businesses in particular,” Ms. Marcus said.