Experts warn against splurging savings of reduced fuel price on unnecessary luxuries on Black Friday and Cyber Monday. Photo: Doctor Ngcobo/African News Agency (ANA)

CAPE TOWN – Depending on how much the government plans to recover for the R2 billion it paid to keep the fuel price low in November, consumers could be looking at a reduction in the petrol price of around R1.50 a litre while the diesel price could drop by as much as 92 cents a litre.

Efficient Group chief economist Dawie Roodt said rather than using the standard formula for calculating the fuel price, the government would directly play a role by deciding how much of the so-called slate levy it wanted to recoup.

“The state is out of pocket by around R2bn as a result of subsidising the fuel price in November. My expectation is that they will recoup it over two months rather than taking it all back in December in which case we could be looking at a reduction in the petrol price of around R1.50 a litre while diesel will drop by about 90 cents a litre.”

Roodt warned that the overall economic outlook remained grim with more jobs that will be lost on a month-by-month basis while inflation-related pay increases will be few and far between.

“The one exception is the government which continues to pay well above inflation-related increases to its bloated staff.”

He warned that if the state did not drastically reduce its massive debt which now stands at about 55 percent of gross domestic product (GDP), South Africa was getting ever closer to the abyss where it would have to ask the International Monetary Fund (IMF) to bail it out, which would result in immediate austerity measures being imposed on the country.

Massive poverty

“We could be looking at a situation similar to the one that brought massive poverty and hardship to Greece when the IMF had to bail them out,” Roodt said.

Neil Roets, chief executive of debt counselling company, Debt Rescue, said deeply indebted consumers should not see the reduced fuel price as an opportunity to splurge on Black Friday and Cyber Monday sales.

“South African consumers collectively owe their creditors in excess of R1.7 trillion with most of them three months or more in arears with their repayments.

“This windfall is an opportunity to start paying off debt and save as much as possible for a rainy day.

“While it is true that there will be some very tempting deals on offer, consumers should think long and hard before plunging themselves even deeper into debt by splurging on luxury goods that they most likely don’t need.

Tempting deals

“Taking place on Friday November 23, many retailers and online shops … have promised deals that would tempt even the most financially distressed among us.

“The short answer is – don’t. For the past several years we have seen the impact that Black Friday and Christmas shopping sprees have had on consumers when they approached us to try and get them out from under the financial mess that reckless spending has caused.

“We are far from seeing the light at the end of the tunnel. It is our belief and many leading economists share that belief that we are far from staging a recovery.

“In short, it is my belief that things are going to get a lot tougher before they get better. Now is not the time to act recklessly. On the contrary – it is more important now than ever before to implement fiscal discipline and save whatever money is left over at the end of the month.

“Buy only what is absolutely necessary. While we all feel that we desperately need a holiday and the end of a brutal year, keep those holidays within budget and don’t think that if you don’t have the money for school fees in December that the money will somehow, magically become available in January when the schools reopen,” Roets said.

Content supplied by Debt Rescue.