SA consumers caught between rate cuts and Eskom's burden

AS OF 2025/26, the gross South African government debt was R6.09 trillion ($412.04 billion), with a debt-to-GDP ratio of 77.4%.

- CORRIE KRUGER

SOUTH Africans are experiencing economic relief through interest rate cuts and fuel price decreases, potentially adding R54.7 billion in consumer spending power. However, these gains are effectively neutralised by Eskom's spiralling costs and controversial pricing structure, raising serious questions about Nersa's regulatory effectiveness and the sustainability of the current energy model.

(HENK KRUGER Independent Newspapers)

The national government's gross loan debt increased by 8.5% year on year to R5 817bn (78.1% of GDP) as of 30 June 2025.

The private sector debt linked to a variable rate is: Home loans (mortgages):

· R1.1 trillion outstanding (largest category of household debt).

· Vehicle finance: R500 bn outstanding.

· Personal loans: R170 bn outstanding.

· Credit card debt: R183 bn outstanding

· Total variable rate debt R1 953bn. For every half a percent reduction in the short-term interest rates, the private sector has an additional R 9 760 000 000 per annum, or R 813 333 333 per month, discretionary spending. Total liquid fuel consumption: Around 27-30 bn Liters annually (varies slightly year to year depending on economic activity and imports). Breakdown by type (approximate share):

· Diesel: ~ 50% of total consumption

· Petrol (gasoline): ~ 30%

· Jet fuel, LPG, paraffin, furnace oil, aviation gasoline: ~ 20% combined. As of the current year, consumers will see a reduction in price of R1,5 per Liter. This translates to an enormous boost of R 45 000,000,000 saving.

Add the savings in interest rate payments, and we are up to a total saving of R54 760,000,000.

There ought to be further spinoffs in lower prices that would work through the system as retailers pass on cost savings to consumers. On the other hand, in 2025, Eskom's approved revenue requirement was R384.6 bn.