{"id":837592,"date":"2025-09-15T14:47:03","date_gmt":"2025-09-15T12:47:03","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=837592"},"modified":"2025-09-15T14:47:09","modified_gmt":"2025-09-15T12:47:09","slug":"new-target-could-prevent-riots-and-social-unrest-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/837592\/new-target-could-prevent-riots-and-social-unrest-in-south-africa\/","title":{"rendered":"New target could prevent riots and social unrest in South Africa"},"content":{"rendered":"\n

A lower inflation target for South Africa may potentially decrease the likelihood of social unrest erupting in the country, according to Deputy Finance Minister David Masondo.\u00a0<\/p>\n\n\n\n

The South African Reserve Bank (SARB) is pushing for a new inflation target, claiming that the current range makes the nation uncompetitive and causes price pressure on citizens.<\/p>\n\n\n\n

SARB Governor Lesetja Kganyago recently announced that the Monetary Policy Committee (MPC) will base its interest rate decisions on a “preferred” 3% target.\u00a0<\/p>\n\n\n\n

Although this is still within the target range of 3% to 6%, it is far lower than the “official” 4.5% midpoint target on which the SARB has been basing its interest rate decisions.\u00a0<\/p>\n\n\n\n

The SARB does not set the target, with the Minister of Finance responsible for mandating the range.<\/p>\n\n\n\n

The National Treasury and the SARB are working on finding a new target band, noting earlier this month that a formal announcement will be made as soon as practical to anchor expectations.\u00a0<\/p>\n\n\n\n

South Africa\u2019s inflation rate has been subdued over the last year, sitting around 3% since October 2024.  However, early signs suggest inflation is starting to creep higher, with the July 2025 print at 3.5%. <\/p>\n\n\n\n

While markets await an official announcement, Masondo has endorsed the lower inflation target.<\/p>\n\n\n\n

Speaking at the RMB Morgan Stanley 2025 Investor Conference, Masondo noted that the current inflation-targeting framework is far too wide and should be narrowed over time.\u00a0<\/p>\n\n\n\n

\u201cThe principle remains clear: low and stable inflation supports competitiveness, boosts demand, reduces borrowing costs, and strengthens employment creation,\u201d said Masondo. <\/p>\n\n\n\n

On top of this, he added that prices can also lead to less social upheaval across the country. <\/p>\n\n\n\n

\u201cPolitically, it also helps to prevent the kind of social unrest that high inflation and high unemployment <\/strong>can trigger.\u201d<\/p>\n\n\n\n

Changes for South Africa <\/h2>\n\n\n
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Deputy Finance Minister David Masondo<\/figcaption><\/figure><\/div>\n\n\n

Masondo also highlighted the efforts of the National Treasury to achieve fiscal sustainability. <\/p>\n\n\n\n

This includes expenditure control, with South Africa maintaining a primary budget surplus, where revenue exceeds non-interest spending, for three years. <\/p>\n\n\n\n

\u201cThis outcome is critical because it reduces the debt burden and lowers debt-service costs, which in turn lowers the sovereign risk premium,\u201d he added. <\/p>\n\n\n\n

However, he noted that sustainable debt is still a cornerstone for fiscal sustainability. <\/p>\n\n\n\n

\u201cIt is not just about how much debt we carry, but whether that debt can be serviced, and more importantly, what the debt is used for.\u201d <\/p>\n\n\n\n

\u201cDebt that funds consumption weakens the economy; debt that funds infrastructure investment expands the economy\u2019s capacity and unlocks growth.\u201d <\/p>\n\n\n\n

South Africa\u2019s debt-to-GDP ratio stood at 76.9% in the 2024\/25 period, against a projected 74.7%. <\/p>\n\n\n\n

In the third budget for 2025, the National Treasury projected that the ratio would stabilise at 77.4% of GDP by the end of 2029\/30.\u00a0<\/p>\n\n\n\n

\u201cWhen the Finance Minister delivers the MTBPS in November, he will provide an update on this trajectory,\u201d said Masondo. <\/p>\n\n\n\n

\u201cImportantly, given the delays in tabling and approving the Budget earlier this year, the Minister will also announce some adjustments to the budget process to reduce uncertainty.\u201d <\/p>\n\n\n\n

The Deputy Minister said that uncertainty comes at a cost, as it delays investment commitments and raises the cost of capital, as debt and equity investors demand higher returns to manage heightened risks. <\/p>\n\n\n\n

Addressing South Africa\u2019s high levels of unsustainable debt means achieving stronger economic growth, as South Africa\u2019s growth has been weak for more than a decade. <\/p>\n\n\n\n

Masondo admitted that GDP per capita has declined, unemployment has risen, and macroeconomic fundamentals have deteriorated over the last 10 years. <\/p>\n\n\n\n

National Treasury predicted 1.4% for the year, but higher levels of growth are needed to increase tax revenues, as well as create jobs, household income and profits for companies. <\/p>\n\n\n\n

\u201cStronger corporate earnings enhance investment attractiveness, reduce sovereign risk premiums, lower the cost of equity, and ultimately strengthen our stock market performance,\u201d said Masondo. <\/p>\n","protected":false},"excerpt":{"rendered":"

Deputy Finance Minister David Masondo believes that a lower inflation target has the potential to lower social unrest in South Africa. <\/p>\n","protected":false},"author":95,"featured_media":739265,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[3796,2214,3619],"class_list":["post-837592","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-national-treasury","tag-rmb","tag-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837592","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=837592"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837592\/revisions"}],"predecessor-version":[{"id":837602,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837592\/revisions\/837602"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/739265"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=837592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=837592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=837592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}