Surprise, surprise - FinDep Masondo accepts hard truths about sound money

Key topics:Masondo urges monetary discipline to protect the poor, not the wealthy.SA’s low growth and rising population fuel social tension and inequality.Inflation targeting and debt stability aim to restore investor confidence..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Alec Hogg.It is rare to hear a senior ANC leader articulate the case for orthodox economics with the clarity of a central banker. Much less if they are proud members of the SA Communist Party. But in his address to the party’s Progressive Business Forum (PBF) in Sun City this morning, Deputy Minister of Finance David Masondo did exactly that. A Marxist intellectual (PhD from NYU) and high-ranking member of the SACP (card carrier since 1993), Masondo was tasked with explaining why monetary systems matter. His approach was refreshingly rational, with an underlying message that even ideological adversaries would be hard-pressed to question. For years, the debate in South Africa has been clouded by populist rhetoric demanding loose purse strings and "creative" monetary intervention. Masondo’s speech, however, signals a refreshing return to rationality: money isn’t just a technical tool; it is the bedrock of a just society.The context Masondo painted was grim, but honest. .Read more:.Growth, not redistribution, key to reducing global inequality: Katzenellenbogen.He explained how, for the past decade, SA has been stuck in a trap of its own making. Between 2014 and 2024, the economy averaged 0.7% annual growth. Meanwhile, the population grew by 1.1%. You don’t need an MBA to do the math. As a nation, South Africans are getting poorer. When the economic pie shrinks, the number of mouths to feed grows. The result: social tension, tribalism, and the kind of fragmentation that threatens the very democratic project.Masondo’s remedy is not to run the money-printing press, but to exercise discipline. His central thesis — price stability is a prerequisite for inclusive growth — cuts through the noise of those who argue high inflation is a tolerable price to pay for short-term stimulus.He correctly argues that inflation is a tax on the poor. The wealthy have assets to hedge against currency devaluation; the poor have only their wages and social grants. When the price of basic goods rises erratically, it is the grandmother supporting a family on a pension who suffers first. Masondo used the simple analogy of purchasing power: if R100 bought ten oranges yesterday and only nine today, the value of labour has been stolen. Protecting the currency, therefore, is not about protecting the rich—it is about protecting the vulnerable.Perhaps the most significant takeaway for those in attendance was Masondo’s firm defence of the new inflation targeting framework. The move from a 3-6% band to a sharp 3% target is a bold signal to the markets. It suggests the days of tolerating the upper end of the bracket are over. By anchoring inflation lower, the Treasury and the Reserve Bank aim to reduce the cost of capital and, crucially, foster the structural competitiveness that South African exporters desperately need.On the fiscal side, the Deputy Minister offered a dose of realism that will comfort the global rating agencies. He insists that the government’s stabilisation of public debt is not "austerity" but survival. Borrowing carries the obligation to repay. Default is the fastest route to national ruin. With revenue collections looking up and debt service costs stabilising, there is a glimmer of light at the end of SA’s fiscal tunnel.However, Masondo was careful not to oversell the role of monetary policy. A stable Rand and low inflation are necessary conditions for growth, but on their own, they are not sufficient. They provide the canvas, but they do not paint the picture. That requires structural reforms—fixing the ports, stabilising the grid, and unshackling the private sector.For investors, the message is clear. The "adults in the room" at the Treasury understand the stakes. They won the greylisting battle and are holding the line on inflation not just because the textbooks say they should, but because they understand that without a stable monetary foundation, the dream of an inclusive economy is just that — a fantasy.

Surprise, surprise - FinDep Masondo accepts hard truths about sound money

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