African National Congress (ANC) Nelson Mandela Bay councillor Andile Lungisa has lauded President Cyril Ramaphosa’s R500-billion economic and social relief package.
However, he wants Ramaphosa to “order” SA Reserve Bank Governor Lesetja Kganyago to print the R500 billion.
In his address to the nation on Tuesday evening, the President said South Africa is in discussions with the International Monetary Fund (IMF), World Bank, BRICS’ New Development Bank and the African Development Bank to fund a portion of the package.
However, writing on Twitter, Lungisa said, “President Ramaphosa spoke so well and outlined a clear plan of action for our country. He is supported.
“My only request to the President is to order the Governor of our Reserve Bank to print the R500 billion instead of borrowing from IMF, World Bank and other financial corporations.”
Lungisa’s tweet sparked intense debate among his followers, with many of them arguing that such a move would cause inflation.
He nevertheless stuck to his guns in another tweet, “In a crisis, with periods of deflation, it is possible to increase the money supply without causing inflation. If you will also remember as a county we had a big debate about quantitative easing (increasing the monetary base).”
Printing money ‘not a simple matter’ – expert
In an emailed comment to Current Affairs ZA, Xhanti Payi, a consulting economist at Nascence Advisory & Research, cautioned that printing money “can be very destructive.”
He said, “Printing money is not a simple matter of putting paper into a machine. It can be very destructive. Remember that money is a store of value, which means it must be backed by value, or production.
“If there’s no production, the money will chase the few available goods, driving up prices and causing inflation. But it’s important to note that in this package, there is a level of money printing since the Reserve Bank will contribute to the R200 billion guarantee.”
The Constitution also states that the Reserve Bank should exercise its mandate “independently and without fear, favour or prejudice, but there must be regular consultation between the Bank and the Cabinet member responsible for national financial matters.”
Lungisa is a strong proponent of nationalisation of the Reserve Bank. Last year, he took offence at Kganyago’s reference to such proponents as “barbarians at the gates of SARB.”
He tweeted, “Lesetja Kganyago, a dutiful servant of our racialist classes supérieures, is an ardent disciple of the neoliberal dystopia that has condemned millions of African people to a desolate existence [sic].”