With Eskom more that R420-million in debt and municipalities owing a further R27-billion to the effectively bankrupt state-owned enterprise, deeply indebted consumers in South Africa are going to feel the pain as an increasingly distressed fiscus is trying to stop the wheels coming off.
Efficient Group chief economist Dawie Roodt warned that there was a high likelihood of further downgrades coming from the ratings agencies which would further tighten the noose around the necks of deeply indebted consumers.
“The biggest single remaining problem is the vastly overstaffed civil service and the fact that government employees consistently get increases well above the inflation rate.”
He said the only solution to this problem would be a a head-on clash between South Africa’s increasingly powerful union movement and the government to radically reduce the number of government employees.
Neil Roets, CEO of one of the largest debt counselling companies in South Africa, Debt Rescue, said in line with their expectations there had been a stampede of consumers who were applying to be placed under debt review after their spiralling debts had finally caught up with them.