Latest news with #R254
The Citizen
4 days ago
- Business
- The Citizen
Repo rate cut offers no shelter from Budget 3.0 fallout for consumers
Thursday's repo rate cut is unlikely to bring much relief to cash-strapped consumers, as any savings will be offset by the rising fuel levy eating into their income. Although the Reserve Bank's decision to cut the repo rate by 25 basis points on Thursday is good news for economists, it will not shield South Africans from the burden of the fuel and sin tax levies introduced by Budget 3.0. Neil Roets, CEO of Debt Rescue, warns that increased taxing of the workforce is not the answer and will put further financial strain on households, driving them to new depths of despair at a time when they are buckling under the weight of multiple unsustainable inflation-related living costs. 'The reality is that the finance minister's decision to impose new tax measures will hurt lower-income families most, as they will bear a proportionally higher burden, forcing them to make impossible lifestyle choices with the little disposable income they have left.' Before the South African Reserve Bank (Sarb) governor, Lesetja Kganyago, announced the repo rate cut this afternoon, economists polled by Reuters accurately predicted that the Bank would restart its repo rate cutting cycle this month, trimming the repo rate by 25 basis points to bring down the interest rate to 7.25% as the latest inflation data strengthens the case for monetary easing. ALSO READ: Reserve Bank cuts repo rate thanks to lower inflation, stronger rand Repo rate cut too small to matter for consumers 'While any cut in the repo rate benefits consumers, the change is simply not big enough to make any real difference in their lives, or to encourage growth in the economy. The impact on consumers will be minimal, as the 25 basis points cut will mean a tiny saving of R254 per month on a R1.5 million home loan and around R65 on a R500 000 car loan. 'Ultimately, a growing economy is the only solution that will slowly lift the weight of unsustainably high living costs from the shoulders of South Africans,' Roets says. Inflation currently remains outside the Sarb's target range of 3% to 6%, with the most recent data showing that consumer inflation was 2.8% in April, just slightly above March's 2.7%. However, Roets points out, inflation on food and non-alcoholic beverages was 4.0%, the highest it has been since September 2024. 'Overall, inflation is still considered low, which would have been a strong incentive to cut the current repo rate. The exchange rate of the rand also remains a key factor in economic stability and would have influenced the MPC's decision.' ALSO READ: Reserve Bank could cut repo rate on Thursday, but will it decide to? Move to lower inflation target will affect repo rate Kganyago is a longstanding advocate of shifting to a lower inflation target, arguing this would ensure South Africa is better placed to compete with its trading partners. He said earlier that a single-point target of 3% would be in line with South Africa's peers and lead to lower interest rates in the long term. However, his critics worry that reaching a lower inflation target will require tighter monetary policy that will impede growth and employment in a country with one of the highest jobless and poverty rates in the world. On Thursday, Kganyago reiterated his view, saying that the Monetary Policy Committee (MPC) believes that the 3% scenario is more attractive than the 4.5% baseline and would like to see inflation expectations move lower, towards the bottom end of their target range. He also said the MPC will consider scenarios with a 3% objective at future meetings. However, Annabel Bishop, chief economist at Investec, warns that a lower inflation target risks scuppering further interest rate cuts this year too. 'With a change to the inflation target reportedly occurring soon this year, the Sarb has chosen to cut interest rates this month to avoid the limitation of doing so in the future but then could easily be at risk of needing to reverse the cut.' ALSO READ: Salaries decreased by 2% in April, but higher than a year ago Slow pace of repo rate cuts perpetuates debt trap Roets says the reality is that the slow pace of the country's repo rate reductions is perpetuating the debt trap that millions of ordinary South Africans find themselves in, leaving millions with no option but to survive on credit. 'This scenario has been escalating since the prolonged tightening cycle began towards the end of 2021, when the MPC raised the repo rate by a cumulative 4.75% between November 2021 and May 2023, taking it from 3.50% to 8.25%, the highest level since 2014. ' Against this backdrop, the latest Statistics SA General Household Survey, released on Tuesday this week, reveals shocking statistics about hunger in the country. According to the survey results, almost a quarter of South African households did not have enough food to eat last year. This means that around 14 million people out of South Africa's population of 63 million went hungry. Of those polled, 22.2% of households considered access to food inadequate or severely inadequate. 'South Africans need real financial relief. This is a glaring red flag that should be at the top of the list of concerns for government. Sadly, this means more and more South Africans are relying on their credit and store cards to put food on the table and keep the lights on. 'The likelihood is that they will default on debt and fall into an even deeper trap, as the cost of credit increases due to existing debt. This is most evident with big purchases like home and car loans.'
IOL News
21-05-2025
- Automotive
- IOL News
DRIVEN: New Honda Amaze arrives with better looks, high-value price tag
The new Honda Amaze is now available in South Africa. Image: Supplied Notwithstanding the somewhat ambitious name, the Honda Amaze has proven itself, through two generations, to be a somewhat solid and dependable entry-level product for that small segment of the market still seeking a saloon. Admittedly this little Honda has never been much to look at, yet judging by the reaction to the third-generation model launched in South Africa this week, that is all set to change. With its large honeycomb grille, standard dual-LED headlights and a tail section that strongly resembles the latest Ballade, the new Amaze drew many admiring glances at its launch event, held in Cape Town. Also quite head-turning is the price tag, which starts just R1,000 north of the previous version, despite more features being fitted, and an upgraded service plan. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ As before, the new sedan measures just under four metres in length. Image: Supplied The line-up remains identical to the previous model, with the 1.2 Trend manual kicking things off at R254,900 and the 1.2 Comfort offering a few extra features for R274,000 as a manual and R294,900 in CVT guise. 15-inch alloy wheels feature as standard, with a silver finish on the Trend and a dual-tone colour scheme on the Comfort, which also gains LED front fog lights and a painted black grille. With the Amaze retaining its familiar dimensions at just under four metres in length, and a 2,470mm wheelbase, cabin length remains as before, but the vehicle is now 38mm wider. Boot space is listed at 416 litres, which is impressive for a compact sedan. The cockpit area has received a complete makeover, with smarter materials and a horizontal bar that stretches across the dashboard to resemble a full-length air outlet panel. It blatantly mimics the latest Civic's cockpit, albeit with a more basic material mix. Both versions are fitted with a new 8.0-inch infotainment screen that juts above the dashboard, as well as a new 7.0-inch TFT driver display. Buyers can also look forward to wireless Apple CarPlay and Android Auto connectivity, as well as automatic climate control, keyless entry and a four-speaker audio system. The redesigned cabin looks smarter and gains a new touchscreen and TFT driver display. Image: Supplied In addition, the Comfort variant gains a 15W wireless smartphone charger, six-speaker audio system, push-button start, automatic headlight activation and steering wheel paddle shifters on the CVT. However, cruise control is not fitted to either of the models, nor are any of the ADAS driver assist features that are available on overseas models. Vehicle Stability Assist is standard, however. Speaking of safety, the Trend is fitted with dual front airbags and the Comfort gains side and curtain crash bags. What's it like to drive? The Honda Amaze retains its predecessor's 1.2-litre normally aspirated i-VTEC petrol engine, which delivers 66kW and 110Nm. Honda claims a combined fuel consumption figure of 5.5 litres per 100km for the new model. Being an entry-level car, a bit of patience is required, and even on our coastal launch route the vehicle felt somewhat sluggish. That said, I did enjoy my time behind the wheel of the five-speed manual model with its slick-shifting action and well-spaced ratios. The CVT version has received a few software upgrades, with seven programmed 'steps' designed to mimic gear changes, but these were hardly discernible in the vehicle we sampled .That noisy drone that is characteristic of continuously variable gearboxes was very much apparent in this vehicle, sometimes to the point of irritation while attempting to keep up with fast-paced traffic. The manual, in my opinion, is a better drive, but with urban traffic seemingly denser by the day, it's understandable why more and more people would gravitate towards the auto version. The suspension, being designed for Indian road conditions, is comfortable and compliant, as far as we could discern on the Western Cape launch route, which took us around the Peninsula towards Hout Bay. Conditions were wet and miserable, but the Amaze felt stable and offered sufficient grip even on the twistiest of sections. VERDICT Like its predecessor, the new Honda Amaze is a simple, solid and honest package, but the redesign makes it a lot nicer to look at, both inside and out, and the vehicle has also gained some modern new features. As a further bonus, the service plan has been extended to four-years or 60,000km worth of coverage, up from two-years/30,000km. The new Honda sedan is well worth a test drive, but will inevitably face stiff competition from Suzuki's new Dzire.
The Citizen
29-04-2025
- Business
- The Citizen
Eskom ready to start borrowing again
But vows to keep debt at sustainable levels. n a major shift, Eskom in its planning assumes that tariff increases will in future not exceed 10%. Picture: Gallo Images Power utility Eskom is ready to resume its borrowing programme once the current government debt relief programme of R254 billion, which came with a ban on new borrowings, has run its course at the end of the current financial year. It has however vowed to keep its borrowings below the limit of R300 billion, a level it hopes to reach in the financial year ending on 31 March 2030, down from R411 billion at the end of the current financial year. Source: Eskom Laying out its capital and finance plan for the next five years before the parliamentary portfolio committee on energy and electricity on Friday (25 April), Eskom made it clear that it wants to keep its total outstanding borrowings at a sustainable level, which it says is below R300 billion. Five years ago, former Eskom CEO André de Ruyter said Eskom needed to halve its debt to R200 billion to be sustainable. ALSO READ: MPs scold Eskom after AG report highlights little progress [VIDEO] More transparency would be good Peter Attard Montalto, MD of financial consultancy Krutham, says: 'Eskom's future debt plans after the bailout ends are slowly becoming known but it would help creditors and markets for there to be more transparency such as on how it thinks its debt carrying capacity is higher, how it will fund and how unbundling will proceed including what changes to holdco loan documentation is needed. 'Eskom has not given any sort of detailed market update for far too long.' The government debt relief came after Eskom found itself so deep in debt that it was unable to keep up with its commitments without assistance from the fiscus. Government agreed to the R254 billion package, subject to several conditions, including a ban on further debt, to restore Eskom's sustainability. It was dispersed over three years, the current year being the last. ALSO READ: Nersa slashes Eskom's tariff hike – but consumers could pay the price in taxes Utility's financials show 'marked' improvement The numbers for the first nine months of the current financial year that Eskom showed lawmakers testify to a marked financial improvement over the previous financial year, which was one of Eskom's worst ever. On the back of its improved plant performance that led to a big reduction in load shedding, Eskom's sales volumes improved by 3.6%. Together with the 12.74% tariff increase, this resulted in a 16% improvement in revenue, while primary energy cost shrunk by 17% thanks to the reduced reliance on diesel-gobbling open-cycle gas turbines. Its profit before tax improved from a loss of R10 billion in the previous corresponding period to a R34 billion profit by December 2024, and outstanding securities and borrowings reduced from R439 billion to R409 billion. ALSO READ: SA's poor service delivery linked to almost R500 billion spent on SOE bailouts Capex plan Considering the lower-than-expected revenue allocation it got from the energy regulator Nersa, Eskom plans capital expenditure of R321 billion over the next five years. The largest portions of the capital spend will be for generation (R140 billion) to fund new gas and renewable energy projects, and transmission (R133 billion for the transmission development plan.) Distribution's share of R44 billion will be frontloaded over the next three years to fund the roll-out of smart electricity meters in an effort to curb electricity theft. Eskom has reduced its operating budget by R50 billion spread over five years, with cuts mainly from the primary energy spend. ALSO READ: Godongwana says reports Treasury will take over portion of Eskom's debt are 'inaccurate' New debt It will increase new borrowings from the 2028 financial year, amounting to R75 billion, but maintaining the R300 billion limit. Source: Eskom In a major shift from previous revenue applications, Eskom in its planning assumes that tariff increases will in future not exceed 10%. Average tariff increases for FY26, 27 and 28 have been set at 12.74%, 5.36% and 6.19% respectively. For the current year alone it wanted 36.15%. ALSO READ: Nersa approves 12.7% electricity tariff hike for Eskom The big worry … The big concern remains the growing municipal debt to Eskom. At the end of March this amounted to almost R100 billion – representing 33% growth from a year before. Eskom CEO Dan Marokane said the utility has now accepted that the National Treasury municipal debt relief plan, which offered a debt write-off to municipalities over three years, provided they comply with strict conditions, has failed. Of the 71 municipalities that were approved for participation in the programme, only 16 were considered compliant or were still within the grace period to restore their compliance by the end of February, according to National Treasury. Fourteen achieved the first debt write-off, which totalled R3.5 billion, while 60 were served with letters of non-compliance. Marokane said Eskom wants the support of National Treasury to make it mandatory for those municipalities that are in arrears to enter into Distribution Agency Agreements with Eskom. These agreements would give Eskom the right to take over the electricity distribution functions in these municipalities. This would include metering, billing and revenue collection. Eskom would retain the amount owed for bulk purchases and pay the balance over to the municipality. In addition, the amounts national government pays municipalities to compensate them for free basic electricity provided to indigent consumers will be paid directly to Eskom. The reason for this is that municipalities use it for other purposes instead of paying their Eskom bills. This article was republished from Moneyweb. Read the original here.
