The South African Federation of Trade Unions (SAFTU) has demanded a five percent interest rate cut from the South African Reserve Bank, noting that this could aid the country’s ailing economy.
In a statement on Thursday, 19 March 2020, the South African Federation of Trade Unions called on the South African Reserve Bank (SARB) to impose a five percent interest rate cut ahead of its Monetary Policy Committee (MPC) meeting, which will be chaired by Governor Lesetja Kganyago. In his address on Sunday, 15 March 2020, President Cyril Ramaphosa had urged the country’s citizens to enter a quarantine by working from home and limiting physical contact with others as much as possible. Because this is not an easily viable option for many, and may result in job losses for some, SAFTU has proposed several strategies to mitigate this.
Following the Congress of South African Trade Unions’ (COSATU) suggestion of offering a one to three-month loan repayment holiday, SAFTU also called on SARB to offer “a formal debt repayment holiday for suffering poor and working people who are without income in the period ahead…” SAFTU noted that although the interest drop is anticipated to be between 0.5 to one percent, they are calling for a five percent cut that will drop current levels from 6.25 percent to almost one percent.
SAFTU acknowledged that the country’s current state of economic stagnation may lead to the economy suffering a formal depression, due to a ten percent crash to the gross domestic product (GDP). However, the union noted that this cut would “prevent ordinary people from contagious defaults that, in turn, would threaten South African banks.”