Government and Eskom debt is huge, ratings downgrade likely – Debt Rescue.
Government corruption and mismanagement are to blame for the dire situation consumers face due to the fuel and electricity increase implemented this week.
Experts said the electricity hike on Monday and petrol hike yesterday would hit consumers and businesses hard. They predicted that Eskom would continue to be a drain on consumers’ pockets, as an attempt to resuscitate the bankrupt entity ensued.
Dawie Roodt, chief economist at Efficient Group, said Eskom’s tariff increase was the tip of the iceberg and more were coming. “Eskom is hopelessly bankrupt. It is corrupt and massively overstaffed and the majority of its power stations require billions of rands to get them to function properly. Without a doubt, they will keep on increasing tariffs.
The situation at Eskom Is dire: debt exceeds R420 billion and gross operational failures, general mismanagement and corruption is still the order of the day.’ Neil Roets, CEO of Debt Rescue, said the fuel increase and the 14% rise in the electricity tariff would hit consumers like a ton of bricks.
That electricity is increasing at almost three times the rate of inflation is something that nobody in government seems to care about, nor that a whole range of additional taxes and levies are being added to the petrol price to take it to a historical high.” he said. “Consumers are no longer able to fund the lavish lifestyles and corrupt practices of our government which, despite yearly tariff increases. has been unable to keep the lights on.
DIRE: HALF CONSUMERS BEHIND ON DEBT REPAYMENTS
With gross consumer debt at 81.73 trillion and the government’s gross loan debt at 112.2 trillion in 2016-17, it’s clear South Africans are in for a very rough ride.” He said almost half of all consumers were three months or more behind on their debt repayments. “This is without a doubt one of the most difficult periods consumers have been subjected to for a very long time.
We are seeing daily records being set by the number of distressed consumers knocking on our doors to be placed under debt review. “With the economy in its present shape my best guess is we are going to be downgraded, which will further increase the cost of borrowing for the fiscus.” The Organisation Undoing Tax Abuse’s portfolio manager for energy Ronald Chauke said: The general fuel levy, now at 113.52 per litre of petrol, is excessive.