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National Budget gives South Africans hope - and a wake-up call
By Opinion
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Following last weekâs National Budget Speech by Minister of Finance Tito Mboweni, the country first heaved a huge sigh of relief.
There were no painful new tax hikes, as many South Africans had feared. Instead, the minister increased personal income tax brackets by 5%, which effectively puts R 2.2 billion back in the hands of low-income earners.
Social development plans were also boosted, with small but welcome increases to social grants, old age, disability, and care dependency grants, among others. In addition, provinces across South Africa will receive R3.5 billion from the Department of Social Development to improve access to early childhood development services.
Debt – another side-effect of the coronavirus
15 Feb 2021
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Over-indebted consumers are set to face a tough 2021. With over 2 million jobs lost in 2020, the highest number of Covid-19 cases on the continent and the after-effect of strict lockdown restrictions still affecting businesses, the future looks uncertain for many South Africans, particularly financially.
According to Trading Economics, household debt in relation to gross income was already expected to have reached 72.8% by the end of 2020. With many incomes still reduced and no work no pay principles invoked, financially distressed consumers are defaulting on their debt repayments. Unable to cut spending further, many have been forced to take on additional debt, essentially leaving them in a worse position than before. Payment holidays and cash flow relief programs offered since the inception of the lockdown are now being aggressively collected by credit providers. As repayment pressures rise, an
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Consumer costs hit home
How theyâre feeling, what theyâre cutting back on â and why things are likely to get worse before they get better. 10:30
The resilience of relatively high earners is now being tested, while lower earners are contending with a sharp increase in the number of family members and friends they must support financially. Image: Waldo Swiegers, Bloomberg
Big changes in consumer spending patterns were already obvious a year ago when finances started to bite, and things have worsened since then.
âWhichever direction consumers look, price increases are on the cardsâ says Neil Roets, chief executive of Debt Rescue. “And while there is some relief in an unchanged repo rate, the cost of living continues to climb.â
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