In Brief: SARB Rate Decision Deepens Consumer Debt Crisis
Neil Roets, CEO of Debt Rescue, says the South African Reserve Bank’s decision to maintain interest rates unchanged, combined with upcoming VAT increases, unchanged personal income tax brackets, and a substantial rise in electricity tariffs, is placing immense financial pressure on South African consumers.
Roets warns that millions of people are being driven deeper into financial hardship as they grapple with record unemployment, soaring living costs, and high debt levels. Consumer debt currently stands around R2.3 trillion, forcing many into a cycle of ongoing debt, especially regarding large purchases like homes and vehicles. He recommends that those facing financial difficulties should seek assistance from registered debt counsellors to help regain control of their finances.
SARB Keeps Interest Rates Steady, Adding to Consumer Struggles
Written by Town Press
South African consumers were dealt another financial blow on Thursday as the South African Reserve Bank (SARB) decided to keep the country’s repurchase rate unchanged, offering no relief amid mounting economic pressures. The decision was made by the central bank’s Monetary Policy Committee (MPC), with four members voting in favor of maintaining the rate, while two supported a 25-basis-point cut.
As a result, the repo rate remains at 7.5%, and the prime lending rate stays at 11%. This decision, coupled with an imminent 0.5% VAT increase for the current financial year—followed by another 0.5% hike in 2026/2027—has dashed hopes for any respite among struggling South Africans. According to Neil Roets, CEO of Debt Rescue, these compounding financial pressures are pushing millions deeper into despair.
“The government has delivered a fatal one-two punch that will decimate the lives of ordinary citizens, who are already overwhelmed by financial hardship,” Roets said.
He emphasized that even a modest rate cut could have offered a glimmer of hope to embattled consumers drowning in debt due to soaring interest rates. Instead, the VAT increase, coupled with record-high unemployment and rising costs of essential goods, is pushing the nation to the brink. Roets also criticized the government’s failure to adjust personal income tax brackets in line with inflation for the 2025/2026 budget. “This effectively increases the tax burden on individuals, as salaries grow but tax thresholds remain static,” he noted. Adding to the crisis is the 12.7% electricity tariff hike set to take effect on April 1, 2025, further exacerbating financial strain.
“Regardless of the global and domestic economic factors influencing this decision, the impact on taxpayers will be severe. Fluctuating inflation, rising costs, and a shrinking consumer purchasing power have significantly eroded the standard of living, particularly for lower-income households,” Roets stated. “It is unacceptable that hardworking South Africans continue to bear the brunt of the highest interest rates in over a decade, coupled with relentless living cost increases, an escalating water crisis, and food prices that make basic nutrition unattainable for the most vulnerable,” he added.
South Africans are barely managing to stay afloat, with the average consumer now spending 68% of their take-home pay on servicing debt.
“Total consumer debt has reached approximately R2.3 trillion, with more than half of this tied up in home loans,” Roets revealed, citing data from the National Credit Regulator (NCR). He noted that loan applications and arrears hit record highs in Q3 2024, with mortgage arrears climbing to 6.9% of outstanding loans. Payments overdue by one to three months also remain alarmingly high.
“The rising cost of credit keeps many trapped in a vicious debt cycle, particularly for big purchases like homes and vehicles,” Roets explained. “For those struggling to break free from financial distress, seeking help from a registered debt counselor is a proven solution. Thousands have successfully regained control over their finances through structured debt relief programs.”
Read the Townpress Newspaper Article
