ANC's pro-Russian posture fuels repo rate surge and economic turmoil
25 May 2023
Today, the South African Reserve Bank (SARB) Monetary Policy Committee raised the repo rate by 50 basis points.
This will result in another rise in debt servicing costs at a time when South Africans are already battling a cost of living crisis; a crisis triggered and aggravated by the ANC's anti-poor fiscal policy framework and international political posturing.
The Government, instead of fulfilling its duty to foster an environment conducive to economic growth, has essentially launched an unrelenting assault on the spending power of South African households. This crisis serves as a clear indictment of the ANC's policy failures.
Despite the hardship faced by ordinary citizens, the ANC's elite circle of cronies remains shielded from such grim realities, existing within a bubble of privilege. Their obliviousness to the escalating cost-of-living, especially against the backdrop of their own extravagant lifestyles, is an illustration of their indifference to the plight of South African households.
The crisis is exacerbated by the ANC government's disgraceful stance on Russia’s illegal invasion of Ukraine. The loading of weapons onto the Russian ship, the 'Lady R' in Simonstown serves as an egregious endorsement of Russia's aggression and underlines the ANC's alignment with Russian interests over those of the South African people. This alignment alienates South Africa from Western trade partners, a development that would invariably invite economic repercussions, including the devaluation of our currency and loss of trade benefits. This strains the SARB in its effort to shield the rand, intensifying our battle against inflation.
Yesterday’s inflation data starkly illustrates this crisis. Annual inflation has surged by 6.8% for overall goods while food prices have risen by an alarming 14.3%. Retail prices of bread increased by 20.8% in one year. These inflationary pressures hit the impoverished and most vulnerable the hardest.
Yet, there are immediate steps that can be taken to shield hard-pressed households from this escalating storm. The DA has a comprehensive plan to relieve the burden on vulnerable households. Government must implement the reforms proposed by the DA and immediately slash the fuel levy, amplify solar tax rebates to liberate consumers from Eskom's grip, and expand the zero-VAT rated food basket to include essential items like bone-in chicken, beef, canned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee, and soup powder. VAT on these products disproportionately affects the vulnerable South Africans who are already battling to keep food on the table.The DA remains resolved to advocate tirelessly for the adoption of sustainable economic policies and implementable that will alleviate the economic burden on vulnerable South Africans. We refuse to be idle spectators as an inept government continues to jeopardize the livelihoods of our citizens.
Issued by Dion George, DA Shadow Minister of Finance, 25 May 2023
