Mboweni seen staying in post

JOHANNESBURG – South Africa’s government is likely to retain Tito Mboweni as governor of the central bank, but even if Mboweni leaves there’s no threat to the bank’s independence and policies.

Mboweni’s second five-year contract ends on August 7 and he has said he would stay on, if asked. He concluded the June monetary policy briefing by telling reporters ‘see you later’, increasing speculation that he is not leaving.The final decision is up to President Jacob Zuma but his office has been tight-lipped on whether Mboweni will stay or go, which could mean there’s no major shake-up in the offing.(An announcement) has been left so late to make a major change to the current structure. My feeling is that we are unlikely to have anyone but Tito Mboweni remaining governor of the central bank,’ said Colen Garrow, economist at Brait.If there is a change and it’s not going be Mboweni, then that change will come from within the central bank.’The new Zuma administration has been at pains to re-assure nervous investors it will stay the course of fiscal and monetary policies of the past decade, which helped South Africa gain market confidence.Zuma won the ruling party leadership with strong support from unions and communist allies, who hoped for a sympathetic ear, after years of being sidelined by former President Thabo Mbeki and his market-friendly policies.Our baseline scenario is that he stays for say one or two years on a short contract and during that time he’ll groom his successor,’ said Peter Attard Montalto, emerging market economist at Nomura International, suggesting newly promoted Deputy Governor Daniel Mminele as a candidate.Zuma cheered markets in June when he filled a vacant deputy governor’s post with Mminele, a central bank insider who supports inflation targeting – a policy bugbear of Zuma’s leftist allies.However, some analysts stress a change at the top post may not greatly impact how the central bank operated.I don’t know that a new appointee is going to have a dramatic impact,’ said George Glynos, economist at ETM.One should feel relatively comfortable that the central bank itself is made up of a team that has a lot of institutional memory. I would suggest that one not look at the governor as a be all and end all of policy.’FULL SUPPORTChief economist Monde Mnyande and Deputy Governor Xolile Guma have also been mentioned as possible candidates should an insider be promoted.Mboweni has closely guarded the bank’s independence and resisted giving in to pressure.Although unions demanded aggressive interest rate cuts with South Africa in its first recession in almost two decades, monetary authorities felt 450 basis points worth of interest rate cuts since December was enough for now.The Bank’s monetary policy committee left the repo rate unchanged in June at 7,5 per cent, citing inflation concerns.To the union’s chagrin, Mboweni also said if it were up to him alone, there would be no more rate reductions. Finance Minister Pravin Gordhan said in June Mboweni enjoys the Treasury’s full support.Despite their reservations, Cosatu has toned down its rhetoric after initially calling for Mboweni to go.Asked whether Cosatu had discussed Mboweni’s contract with government, spokesman Patrick Craven said ‘not specifically’.It’s not about personalities, it’s about policies.’Since taking office in May, Zuma and his economic ministers have leaned towards market-friendly speak, only promising to ‘debate’ contentious policy points such as inflation targeting.The unions certainly push and lobby but this does not mean government will listen to them,’ said Iraj Abedian, chief executive of the Pan African Investment Research.The fact is: government has little degree of freedom … We are in an economic crisis and they know this. They can do little so they say we’ll debate policy.’Some analysts have not ruled out a possibility of a union-friendly appointment to a vacant post on the policy committee.My biggest worry is that they will fill the post with a union firebrand and extend Mboweni’s contract for a year or two to train this person to be Governor,’ said Nomura’s Attard Montalto.ANC top brass, who are likely to be privy to whether Mboweni will stay, would not comment when approached by Reuters. – Nampa-Reuters