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The Congress of South African Trade Unions (COSATU) welcomes the Reserve Bank (SARB)'s sober decision not to increase the repo rate. 

Inflation has begun to decline from a peak of 7.6% and is now comfortably within the SARB’s target range at 4.8%.  This will provide some badly needed space for an economy that has been battered by a global pandemic, a recession, unprecedented levels of loadshedding, cable theft and a myriad of other crises.  A decision to increase the repo rate would have been an unnecessary and cruel blow to millions of indebted working-class families and the economy.  High-interest rates raise the cost of living for everyone who is repaying a loan.

The Federation hopes that this marks a turn from the reckless zealotry pursued by the SARB over the past 18 months that have seen the repo rate hiked by 475 basis points and brought untold misery to working and middle class families and suffocated the economy.

As inflation begins to dissipate, the SARB will need to start lowering the repo rate to help stimulate the economy and reduce unemployment.  The high-interest rates will continue to deter thousands of small businesses from raising capital to expand current businesses or setting up new ones. This is a serious factor that contributes to the slowdown in economic growth and the slow rate of new job creation.  The expansion of the manufacturing sector will remain an illusion as companies cannot afford to borrow money from the banks to expand their operations and create more jobs.

Treasury needs to take full responsibility for this crisis and action drastic steps to provide the necessary relief to the economy.  The economy cannot afford for the SARB to continue with a staggeringly high repo rate to manage an inflation rate whose causes are external, namely the war in Ukraine, load shedding, and the high price of oil.  Whilst there is little that South Africa can do about the war, there are measures the government can enact to protect the economy and provide relief to workers. Key interventions that Government needs to undertake urgently include:

Lowering the taxes that consume 28% of the fuel price, including placing the Road Accident Fund (RAF) under administration and tabling the RAF and Road Accident Benefits Scheme Bills at Parliament to set it on a path where it lessens its dependence on an unaffordable fuel levy.

Providing more support and relief to Eskom to end its addiction to double digit tariff hikes year after year.

Drastic interventions at Transnet and Metro Rail to ensure that food and other goods and passengers can reach their destinations safely, affordably and timeously.

Reducing the price of 10 essential food items through VAT exemptions by the Treasury and the waiving of markups by retailers.

Adjusting the SRD Grant for the inflationary erosion that has weakened its ability to cushion the poor.  It is beyond shameful that it has not been adjusted for inflation since it commenced in 2020.

Extending the Presidential Employment Programme to accommodate at least 1 million active participants by the November Medium Term Budget Policy Statement and 2 million by the February Budget Speech.

Expediting the long-awaited Two Pot Pension Amendment Bills to allow highly indebted workers early access to their pension funds.

Developing a package of measures to help struggling consumers and SMMEs cope and spur economic growth and job creation.

Ramping up a more aggressive buy local campaign that will support local industries and ensure the economy is less dependent on imports across the value chains.  Consumers, the private sector, and the state all need to actively buy locally produced goods if we are to grow the economy and protect our exposure to international volatility.

Revoking the reckless austerity freeze on infrastructure investments critical to stimulating the economy and rebuilding public services.

It is clear to all properly adjusted persons that the status quo cannot be allowed to continue.  Workers need decisive action by the state and private sector if we are to turn South Africa around.

Issued by COSATU