The ANC’s national executive committee (NEC) has asked the finance minister, Enoch Godongwana, to urgently meet with the Reserve Bank on how inflation can be managed without raising the interest rate again.
Fikile Mbalula, secretary general of the ANC, said on Sunday that the NEC is well aware that the Reserve Bank has a mandate to pursue price stability in the interests of balanced growth. However, the committee does not believe that the “new trend” of interest rate increases is in the best interest of balanced growth.
The Reserve Bank has increased the repo rate ten times since November 2021 by a total of 475 basis points. According to the bank, an increase in the repo rate will stop inflation and prevent the rand’s value from falling further.
Mbalula says, however, that the NEC is deeply concerned about continuous interest rate increases as millions of South Africans are now financially strapped.
“This trend suppresses consumer demand which is a critical element of economic growth.”
The NEC therefore told the minister to enter into discussions with the Reserve Bank and investigate other possible measures. However, this does not leave the minister with much time as the Reserve Bank will meet again on Thursday on the interest rate. Another rate increase is expected.
Mbalula says the NEC discussed the continued rise in the cost of living after the Covid-19 pandemic during its recent three-day meeting and considered a series of interventions; below are goods in the VAT free basket.
“The NEC (also) agreed that the most sustainable way to respond to the rising cost of living is to ensure that we concentrate our efforts on growing the economy based on expanded domestic production.
“The sustained interventions and visible progress in ending load-shedding should stabilize productivity in South Africa, reduce operating costs of businesses and slow down inflation.
“The NEC agrees that there must be urgent interventions in the short term to save the working and middle class from rising living costs.”
ANC does not need coalition partners
Mbalula also made it clear on Sunday that the ANC is not holding coalition talks with any party at this stage.
“The ANC’s NEC (during its recent meeting) discussed matters concerning the 2024 national general election and declared itself ready to contest next year’s election…
“The ANC is focusing on achieving an outright majority victory in the upcoming 2024 election.”