Thursday’s repo rate cut was welcome for ordinary South Africans, but it is coming too late for them to avoid being smashed by debt as they try to make ends meet.
Earlier this week President Cyril Ramaphosa opened an Optimistic message to the nation, commending government for being able to “showcase a country on an economic and security high”.
The president pointed out a number of key economic indicators and developments in the past week that “herald the green shoots of an emerging economic recovery” such as the official unemployment rate that fell from 33.2% to 31.9% in the third quarter of this year; our sovereign credit rating was recently upgraded by S&P; the noteworthy improvement in energy sector; and a sustained turnaround in government’s finances.
Last week, Finance Minister Enoch Godongwana revealed that the budget deficit may have been R24.5bn lower than expected for 2024/2025 due to outperforming deep tax collections and the 2025 Budget expected to add R3.2bn to reduce the deficit by R8.3bn. He also announced the allocation of a once-off top-up of R2.9bn billion to repair the damage of last year’s floods; and the long-term benefits of the overhauling once again of credit provider loopholes and the stimulating investment are clear.
This is definitely reason to celebrate, says CEO of Debt Rescue, Neil Roets.
However, with calls this week from twenty-seven civil society organisations urging the government to review the national minimum wage and the fact that nearly half (almost 50%) of credit-active consumers have impaired credit records, he emphasises that the vast majority of consumers are still in deep trouble.