ANC pushes for rate cuts to boost economy, moves away from VAT hike

Approach attempts to stimulate growth and investments

- By Setumo Stone and Queenin Masuabi

The ANC is shifting its focus to aggressive interest rate cuts and tax reforms as a way to revive the struggling economy, marking a significant departure from its earlier plans to increase value-added tax (VAT).

This new approach, which is likely to draw criticism from certain quarters, is outlined in the ANC’s economic transformation discussion document, which lays out proposals to stimulate growth and investment in the face of persistent economic challenges.

The South African Reserve Bank (Sarb) has always been deemed independent from political interference, and the ANC’s stance points to an intention to meddle with the monetary policy committee to increase money supply in the economy.

The document, which was submitted to the recent ANC NEC meeting, highlights the need for bold measures to address South Africa’s sluggish economic performance, which has seen growth average 0.8% annually over the past decade.

The discussion document underscores the importance of lower interest rates in supporting economic recovery.

It notes that recent rate cuts offered some relief to consumers but argues that the pace of these cuts has been too slow to make a meaningful impact.