Congress of the People is concerned about the economic hardships that most households will experience for many years to come. The MPC has just increased interest rates by 50 basis points. The governor has warned that the country is now in an interest-hiking-cycle.
To add to the woes of consumers, inflation is soaring. The price of petrol will increase next month and householders remain uncertain about the increase in electricity. The s…harp increase in the price of food combined with the deteriorating outlook for many farmers, small scale farmers in particular, indicate the advent of a dry white season and a winter of discontent.
Prime interest rate will now rise to 10.25%. Mortgagees and car owners on floating interest rates will now be under severe pressure.
Lurking in the background, meanwhile, is the threat of increased taxation. Congress of the People has been harping for five years on the excessive consumption side expenditure by the ruling party. It is no secret that as government has run out of money, it will seek to hike taxes. If that happens, the burden will break the camel’s back. South Africa cannot afford a government that is so big, so extravagant and so costly.
As the economic hardships for citizens continue to increase, the ruling party continues to fail in its task of reviving the economy. A GDP increase of .7% will leave the economy in a stagnant position.
There is no doubt that consumers will have to go on tightening their belts. Many who blindly supported the ruling party under President Zuma will now begin to learn the enormous cost of that blind faith. Bad politics, they will learn, makes for economic failure.
In spite of the gathering storm, President Zuma and his cabinet are pushing ahead with the nuclear build programme. Where the money is going to come from, no one in the ruling party is willing to indicate.
For the few who can save, the rates hike will be good news. For the majority, many of whom are already in debt, the outlook is very bleak. For the poor and the vulnerable, the situation is going to be dire.
Issued by Dennis Bloem, COPE spokesperson