‘Rates decision won’t help indebted consumers’

2010-01-27 12:54

THE decision of the SA Reserve Bank’s Monetary Policy Committee

(MPC) to keep the repo rate unchanged at 7% will not help indebted consumers, a

debt counselling company has said.

Luke Hirst, managing director of Debtbusters, said while the MPC’s

decision on Tuesday was due to the precarious stance of inflation this did not

help those who could not afford to repay their debt and faced losing their


“With an estimated one million jobs lost in the first

three-quarters of last year and further retrenchments this year, some relief

needs to be given to South African consumers,” Hirst said.

The SA Reserve Bank said household debt in November last year

amounted to 47.1% of gross domestic product.

It also said 58% of credit-active consumers were in arrears.

“That is 10?million consumers ... this is exorbitant and only

reiterates the need for further rate cuts.”

With an average of 9?000 consumers applying for debt counselling

monthly, South Africans were suffering from debt, while the MPC’s priority

appeared to be sticking within the 3% to 6% inflation target, Hirst said.

He invited Reserve Bank governor Gill Marcus to come to his offices

in Cape Town to speak to indebted clients and find out the reality of the

average South African households’ current financial situation.

“With all due respect perhaps then the governor would think twice

before keeping rates on hold.”

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