The Reserve Bank has raised the repo rate by a cumulative 75 basis points this year, with the latest 25 basis point increase to 7 percent coming in March.
This saw prime lending rates charged by banks to customers increased to 10.5 percent.
DebtBusters, one of many South African debt counsellors, said another increase in the repo rate looms as South Africa’s economy wobbles under the strains of political uneasiness.
Ian Wason, chief executive of DebtBusters, in a statement said: “While we recognise that it is imperative to curb inflation, an increase in the repo rate now will hurt the over-indebted consumer the most. We fear that these consumers are already being squeezed too much”.
DebtBusters said there were more than 10 million South Africans who have fallen into arrears on their debt repayments to date.
The debt counsellor recently said South Africans were R1.64 trillion in debt and were finding it very hard to get out of the “debt trap”, with people aged between 31 and 45 collectively owing 53 percent of all outstanding debt.
The latest National Credit Regulator statistics confirm a crisis situation where 54 percent of South Africa’s credit active consumers are struggling to pay their monthly debt obligations on time.
“Consumers with vehicle finance, mortgages, clothing accounts and credit cards are going to feel it the most. Having already felt the pressures of huge inflationary increases in their expenses, another increase in their debt repayments could be the last straw,” Wason said.
Meanwhile in Zimbabwe has reduced its growth forecast by half to 1.4 percent for 2016 from the initial 2.7 percent owing to a devastating drought that has left more than 4 million people, or 30 percent of the rural population, in need of food aid.
The Finance Ministry announced the revised growth forecast in a quarterly bulletin for January-March 2016 that was received by Xinhua on Tuesday.
“Despite the head winds facing the economy, growth in 2016 is projected to remain positive at 1.4 percent. This is notwithstanding the budget projection of 2.7 percent,” the ministry said in the bulletin.
The ministry also revised downwards projected growth for agriculture to -9.9 percent from the initial 1.8 percent due to the El-Nino induced drought. – ANA
