The new carbon tax will results in the price of diesel increasing by more than 14 cents per litre, adding to the bleak overall economic outlook in South Africa.
Efficient Group chief economist Dawie Roodt said South Africans should prepare for difficult times ahead.
“All of the main economic indicators that we track show that things are going to get a lot more difficult before there is any chance of light at the end of the tunnel,” Roodt said.
“With Eskom’s debt approaching R500-billion and the utility failing to sell enough electricity to cover its daily expenditures, it is going to be incumbent on consumers to keep it from imploding and sinking the country’s entire economy.”
Debt Rescue CEO Neil Roets noted that a lack of a clear plan from government to reduce its expenditure could also have an adverse effect on the economy.
“While President Ramaphosa’s new cabinet blows a breath of fresh air into the political landscape it remains to be seen whether it will be enough to placate the ratings agencies who may see Eskom’s spiralling debt as enough reason to downgrade the country’s sovereign bonds,” Roets said.
Roets predicted that another round of fuel price hikes would follow in July, due of the weakening exchange rate and growing volatility in the price of crude oil.
An increasing number of South Africans are falling behind in their debt repayments, he added.
“We are seeing daily records being set by the number of distressed consumers who are knocking on our door to be placed under debt review.”
Almost half of all consumers are three months or more behind in their repayments, Roets said, with the major culprits being credit and store cards.